On Wednesday, British Airways and Iberia gained the European Union’s regulatory approval to merge and to team up with American Airlines to share more of their profitable trans-Atlantic routes.
The companies say the two deals will allow them to cut costs and manage a difficult business climate as they struggle with decreasing passenger numbers and industrial unrest.
The merger between Iberia and British Airways will build Europe’s third-largest airline with a market value of about $7.5 billion pounds. The airlines will hold onto their existing brand identities and claim the deal will create savings of $530 million a year by the fifth year.
The two airlines are among many struggling to survive after a decrease in demand from both business and leisure travelers in the wake of the global credit squeeze. Those who continue to travel have increasingly turned to the less expensive fares of no-frills airlines.
They also plan to expand their oneworld alliance American Airlines, which presently organizes how they sell and operate flights between the 27-nation European Union and the United States.
They will also manage schedules together now, as well as capacity and pricing on flights from Canada, Mexico, Puerto Rico, Norway and Switzerland as well.
Source: USA TODAY