The companies say the two deals will help them cut costs and survive a tough business climate as they struggle with falling passenger numbers and industrial unrest. British Airways' merger with Iberia will create Europe's third-largest airline with a market value of around $7.5 billion pounds. They will keep their existing brand identities and claim the deal will create savings of 400 million euros($530 million) a year by the fifth year.
The two loss-making airlines are among many struggling to survive after a fall in demand from both business and leisure travelers in the wake of the global credit squeeze. Those who are still traveling have increasingly turned to the cheaper fares of no-frills carriers. They also plan to expand their one world alliance with American Airlines, which currently coordinates how they sell and operate flights between the 27-nation European Union and the United States. They will now also jointly manage schedules, capacity and pricing on flights from Canada, Mexico, Puerto Rico, Norway and Switzerland as well. The European Commission said it saw no antitrust worries with British Airways and Iberia merging since they don't compete directly on many routes and would continue to face rivalry where they do -- on flights from London to Madrid and Barcelona.
