BA MERGER IN DOUBT AS IBERIA PLUNGES TO €147M LOSS
Dave Bull / 2009-05-15 11:09:14
Iberia's negotiating hand in its all share-merger talks with British Airways has been weakened by worse-than-expected first-quarter results and the admission that the priority is its own turnaround.
The Spanish carrier was valued as the bigger airline at the end of January, when it was arguing for around half of any combined company – but BA has regained the whip hand after Iberia scrapped its 2008 dividend and warned of likely losses this year.
Iberia yesterday unveiled a €147m (£131m) loss from continuing operations – €30m worse than forecasts – as it noted that "the Spanish airline sector is faced with an extraordinarily challenging set of circumstances". Sales dived 15.6pc to €1.1bn, with pre-tax losses widening from €1.1m to €128m.
He admitted the BA talks were taking longer than planned due to the "volatility of the financial market and the impact on BA's pension deficit, and the complicated situation of our sector".
He acknowledged that sealing a deal with BA was not the current priority, however. "We are currently mainly focused on our own contingency plan which we believe is the most important and immediate challenge," Mr Conte said, adding: "Even with the difficulties we are facing, we remain positive on the outcome of negotiations [with BA]."
Despite the poor figures, Iberia shares rose 1 cent to €1.45, valuing the carrier at £1.23bn. BA, up 0.7 at 163.1p, is now by far the senior partner, valued at £1.88bn. Mr Conte envisages a return to profitability in 2010.
Andrew Fitchie, an analyst at Collins Stewart, said the results were "particularly poor" but stressed there were "still good reasons for proceeding with the merger, including over £400m of combined cost synergies".
Tags: Airlines, Iberia, Ba