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British Airways In Merger Talks With Iberia

Hot on the heels of a very difficult day for the airline industry, after the profits warning from Ryanair, it has been confirmed that British Airways and Spanish airline Iberia are in merger talks. The move has seen British Airways shares move 5% higher and those in Iberia move 20% higher. The combined entity would be valued in excess of £4 billion, substantially less than the value of the groups just 12 months ago.



Even though the shares moved higher after the announcement the fact the move in British Airways was not startling says a lot about the general unease in the stock market at the moment. A proposed merger would normally have seen both shares pushed substantially higher with massive cost savings and a combined strength taken into consideration.



The move apparently has the backing of all major shareholders in both groups and they are also talking to American Airline about a transatlantic deal which would further strengthen the enlarged entity. The bad news is that even though the merger seems set to go ahead it will literally take months to obtain the relevant regulatory clearance from around the world. Quite what affect this will have on the rest of the sector remains to be seen, but others will certainly start talking to each other - if they have not begun already!

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