British Airways, Iberia Sign Merger Agreement

British Airways and Iberia have signed a merger agreement in accordance with a memorandum of understanding signed in November. The merger is expected to be completed in late 2010. The new company will be one of the world’s largest airline groups with 408 aircraft flying to 200 destinations and carrying more than 58 million passengers per year.

It has been structured so that it can take advantage of further consolidation in the global aviation industry. The airlines estimate that the merger will generate annual savings of approximately 400 million euros ($533 million) by the fifth year of the merger.

The agreement creates 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.