Old questions

19 November 2009 By Fiona Maharg-Bravo

Contrary to popular belief, the UK airline s pension scheme is not ringfenced and could pose a threat to Iberia s cashpile in their proposed merger. The pension fund trustees will have to play current negotiations with BA carefully if they do not want to scare Iberia away.

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British Airways and Iberia said on November 12 they had reached a preliminary agreement for a merger that would create about E400m of synergies.

BA's shareholders will hold 55% of the new company (TopCo), while Iberia's shareholders will hold 45%. The deal is expected to be formalised in the first quarter of 2010 and closed by the end of that year.

Under the preliminary agreement, BA and Iberia agreed that "Iberia or TopCo will not provide any guarantee or use any cash or credit facilities to fund the BA pension schemes."

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