Markets Seem to Like British Airways-Iberia Merger

Includes: BAIRY, IBRLF
by: Data Explorers

Iberia's (OTC:IBRLF) merger with British Airways (OTC:BAIRY) is now confirmed, with Iberia taking 45% of the combined entity. Both airlines are likely to keep their own branding and livery.

Iberia reported results Friday; the short base is 0.9% and has been dropping. The British Airways (OTC:BAIRY) short position is over 16%. The market seems to have taken the news as being positive for both companies, with scope for major synergies. There are likely to be knock on effects for other airlines, as the merger is expected to impact the landscape for routes, slots and even airfares. However, the deal is conditional on agreement between British Airways and the BA pension fund trustees.

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The merger with Iberia has been taken well by the markets, with share prices of both companies up sharply. The possible synergies cover flight connections, landing slots, balance sheet, cash flow and pension funding. The short base in British Airways is 16.4%, up from 16% a week ago. This represents just over half of the available inventory. The short base in Iberia peaked at 2% about a month ago, and currently stands at 0.9%.

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