British Airways and Iberia sign merger deal

by B. N. Sullivan

British Airways and Spanish flag carrier Iberia have signed a final merger agreement. Today's agreement will implement terms set forth in a memorandum of understanding signed by the two carriers in November of 2009.  The merger is expected to be completed by the end of this year.

According to a press release issued by Iberia, the merger will create a new holding company called International Consolidated Airlines Group SA, which will be known as International Airlines Group. Both airlines will retain their current operations and operate under their individual brands - British Airways and Iberia. The merged carrier will operate a fleet of 408 aircraft flying to 200 destinations.

Airline officials said that the merger "will benefit both airlines’ shareholders, customers and employees," and "has been structured so that it can take advantage of further consolidation in the global aviation industry." Although such consolidations often result in work force reductions, no announcements have been made regarding staffing levels going forward.

American Airlines, British Airways, and Iberia applying for antitrust immunity

Today American Airlines, British Airways and Iberia announced that they "have signed a joint business agreement on flights between Europe and North America and plan to expand their global cooperation." In similarly worded press releases issued by each of the carriers, the airlines said that they will file for worldwide antitrust immunity from the U.S. Department of Transportation and will notify the appropriate regulatory authorities in the European Union. Finnair and Royal Jordanian are included in the antitrust immunity application.

According to the news releases:

Under the joint business agreement, the three airlines will cooperate commercially on flights between the United States, Mexico, and Canada, and the European Union, Switzerland, and Norway while continuing to operate as separate legal entities. They will expand their codeshare arrangements on flights within and beyond the EU and U.S., significantly increasing the number of destination choices that the airlines can offer customers.

The airlines all are members of the oneworld® global airline alliance. A press release was issued by oneworld® in support of the application for anti-trust immunity.

Crew Response

The Allied Pilots Association (APA), the union representing the 12,000 pilots at American Airlines, issued a statement about the multi-airline business agreement, calling it "problematic on several fronts." In particular, the APA cites the "scope clause" of the contract between the APA and American Airlines, which "embodies management’s promise that if a flight generates revenue for AMR Corp., an American Airlines pilot must be at the flight controls."

The scope clause contains a variety of exceptions for code-sharing agreements, commuter affiliate operations and other situations where an American Airlines pilot is not in control of an aircraft that generates revenue for the corporation. However, APA President Capt. Lloyd Hill points out that the scope clause in the current collective bargaining agreement does not include an exception for a joint business agreement between American Airlines and another airline. "Management therefore needs APA’s consent before this joint business agreement can go forward," said Capt. Hill.

Hill noted that APA representatives met last week in Washington, D.C. with their counterparts from the British Airways and Iberia pilot unions to explore common interests and identify areas of concern. The meeting was prompted by the previously announced plans by American Airlines and the other two carriers to pursue antitrust immunity. He also noted that APA’s board of directors will convene next week to discuss the joint business agreement and antitrust immunity application.

"Make no mistake, we want American Airlines to succeed, but that success cannot come at the expense of the employees," Hill said. "We have serious job-security concerns that must be addressed as part of any revenue-producing agreement with another airline."

As of this writing, there has been no public comment from the British Air Line Pilots Association (BALPA), which represents British Airways pilots, regarding the joint business agreement announced today by American Airlines, British Airways and Iberia.

Separately, BALPA came out in favor of recent merger talks between British Airways and Iberia. A BALPA news release issued late last month states:

"We have been anticipating this for some time. We are already in discussions with the pilot association in Spain.. We support these merger talks. Consolidation within the airline industry is inevitable and a merger of BA with Iberia makes good sense.

"We trust the two companies will take their pilots fully into the process and consult with BALPA and the Spanish pilots' association very closely indeed. Pilots have a lot to offer in the planning stages and want to be full partners in this enterprise."

BALPA does not expect a merger between British Airways and Iberia to result in the loss of any pilot jobs.

[Photo Source]

Iberia Airbus A340 runway overrun at Quito

Late on the afternoon of Friday, November 9, 2007 an Iberia Airlines A340-600 ran off the end of a runway at Mariscal Sucre airport in Quito, Ecuador. Flight IB6463, operated by Spain's national carrier, had just arrived from Madrid, Spain with more than 330 passengers and crew on board. No one was seriously injured. The aircraft was badly damaged.

Airport officials in Quito said that one or more of the tires on the aircraft's main landing gear had burst when it touched down. As the aircraft slid down the runway, the landing gear partially collapsed. The huge aircraft came to rest in an area of grass and sand of the end of the runway on which it had landed. Photos of the aircraft show it leaning to port, resting on the nacelles of the number one and number two engines, which were badly damaged.

Passengers and crew evacuated the aircraft using inflatable slides on the starboard side of the aircraft. An article in the Spanish language publication El País includes a video clip of passengers using the slides to evacuate. Spanish news website El Periódico de Catalunya has published a photo gallery of the A340 accident at Quito.

The accident caused the airport to be closed for some time, during which inbound international flights were reported to have been rerouted to Guayaquil. The A340 is the largest aircraft type authorized to land at Quito.

[Photo Source]