BA Iberia deal hits turbulence

The planned merger between Iberia and British Airways is under threat as the UK's flag carrier announced a gloomy profits warning.

BA has predicted that its operating loss for 2009 up until March 31 will reach £150 million, as a fall in sterling and the official announcement of a recession impact on the aviation industry.

This announcement has furthered weakened the British carrier's negotiating hand in the deal - with the airline initially only prepared to adopt a merger if a ratio of 60:40 was split in BA's favour.

However, the Spanish owned airline Iberia is now worth more than BA at £1.78 billion against £1.54 billion.

Yet, in a statement, BA did suggest that "revenue guidance for the year remains unchanged as being up at least four per cent year-on-year". The proposed merger would create Europe's third largest aviation group.

© Adfero Ltd

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