As BA hurts, Iberia looks to Air France, Lufthansa

photo by jmiguel.rodriguez

The relationship between British Airways and Spanish carrier Iberia runs long and deep. BA owns 13.5% of Iberia and has two seats on its board, and the two airlines are members of the oneworld alliance. The airlines have been pursuing a merger for a while now, and back in February, Iberia chairman Fernando Conte said that a 'preliminary decision' on a merger would be arrived at in March. But only a few weeks ago, Spanish airline Iberia said that it indefinitely postponed the timeline for finishing up merger talks with British Airways; chairman Fernando Conte said that Iberia should instead "concentrate on the reestablishment of its financial solidity." Yet it's interesting how the announcement came right around the time that British Airways announced a record loss and reports emerged about how the carrier is struggling with a pension plan deficit of at least £1.2 billion ($2 billion). BA CEO Willie Walsh has even said that the airline "is in a fight for survival."

Hmm... coincidence?

Probably not. Although talks between BA and Iberia are still continuing, it's clear that Iberia is starting to question the financial viability of its British partner, and so reports that it's looking for a future partner with stronger financial performance aren't surprising. Iberia's finance director, Enrique Dupuy, said Wednesday that Iberia can't hold its own against what he called airline "megagroups", namely, Air France-KLM and Lufthansa. "A merger with BA is a good fit for Iberia, but a merger with Lufthansa or Air France would be quite a good fit as well," Dupuy said. "We have spent a lot of time examining these alternatives, and of course they are not ruled out, perhaps the most attractive aim is British Airways but we also have very attractive alternatives."

In a statement to The Airline Blog, Iberia's international press manager Santiago de Juan made clear that as of now, the only deal being negotiated is between Iberia and BA: "Mr. Dupuy said something Iberia has been saying for some time now, which is that Iberia wants to play an important role in the consolidation process the airline industry is going through. That means that Iberia has analysed the different possibilities for this consolidation process, Air France and Lufthansa included, but at this moment Iberia is in merger talks with British Airways and it is NOT in merger talks with [Lufthansa or Air France]." de Juan would not comment on whether Iberia's recent look at 'different possibilities' had anything to do with BA's financial trouble.