BA-Iberia merger:possible obstacles

graeme at 8:29 a.m. Sat 14 Nov 2009

The Financial Crimes blog warns of possible obstacles to the BA-Iberia merger.

Alex does seem to have a point. The merger MOU says:

Iberia will be entitled to terminate the merger agreement if the outcome of the discussions between British Airways and its pension trustees is not, in Iberia’s reasonable opinion, satisfactory because it is materially detrimental to the economic premises of the proposed merger.

The counter-argument is that if the pension fund trustee’s can be persuaded that the merged airline will be more financially sound, it will be better able to to meet shortfalls in the fund (currently about £2.5bn) — although the agreement does specify that only BA money (not Iberia’s or the new holding company’s) will be used for the pension fund for five years after the merger.

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