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Wednesday, 15 December, 1999, 18:50 GMT
BA buys stake in Iberia

Long-delayed privatisation of Iberia now going ahead

British Airways, American Airlines and five Spanish firms have agreed a deal to buy 40% of the Spanish airline, Iberia, as part of a long-delayed privatisation.

British Airways itself has taken a 9% stake, and become Iberia's major industrial partner.

Iberia: who will own what
British Airways 9%
American Airlines 1%
Spanish corporate investors 30%
Spanish state holding company 54%
Iberia employees 6%
It is investing about 155m and has the right to appoint two directors to the Spanish national carrier's 12-strong board.

They are Roger Maynard, BA's vice-president of commercial affairs in North America, and the former Conservative MP for Watford, Tristan Garel-Jones, now a director at investment bank Warburg Dillon Read.


In February, BA and Iberia signed a commercial agreement to co-operate in a wide range of activities, including joint marketing of flights.

The US carrier, American Airlines, has taken a 1% holding in Iberia.

British Airways: becomes Iberia's major partner
The Spanish government is expected to clear the deal within the next few weeks.

BA and American Airlines are founder members of the Oneworld global alliance, along with Canadian Airlines, Cathay Pacific and Quantas, while Iberia and Finnair joined on 1 September. Aer Lingus and LanChile also joined the alliance this year.

The 688m ($1.1bn) deal is linked to the launch of Iberia's flotation, expected to take place next autumn.

BA and American Airlines between them are taking 10% of Iberia.

The other 30% is being bought by Caja Madrid, Spain's second-biggest savings bank (10%), Banco Bilbao Vizcaya (7.3%), tobacco group Tabacalera's Logista distribution unit (6.7%), retailer El Corte Ingles (3%), and broker Ahorro Corporacion Financiera (3%).

Although Caja Madrid has a bigger stake, BA will have a bigger say in running the Spanish airline from now on, BA officials said.

It has more votes than any of the Spanish partners but needs the support of at least two of them to wield a majority within the core shareholder group.

Conditional deal

BA has set various conditions for its investment and can sell its shares back to the state holding company, SEPI, if any of these are not met.

BA can also withdraw if the flotation of the rest of Iberia is not completed by the end of 2000 or if the partnership fails to win European Commission approval.

Iberia's initial public offering (flotation) has been delayed several times by the Spanish government. It is now expected to take place in February, just ahead of a general election.

Iberia has a tradition of heavy losses. It has been restructured and has recently started to produce profits. However, a pilots dispute and a fare war in Europe have hit its results for 1999.

Iberia has said it expects to close the year with a profit of 25 billion pesetas - down from an original forecast of 43 billion.

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