BA in Iberia showdown talks

By DAILY MAIL REPORTER
Updated:

 

British Airways is set for showdown talks over its 10% stake in Iberia with the carrier's biggest shareholder Caja Madrid, as chairman Martin Broughton said the Spanish lender should make a full takeover bid for Iberia.

Caja became the biggest investor with 24% after buying two blocks of shares from Logista, part of the cigarette firm Altadis, and the BBVA bank.

This effectively blocked a £2.3bn takeover proposal by BA (down 8p at 283¾p) and private equity firm Texas Pacific Group.

Under a 1999 shareholder agreement, core investors in the Spanish carrier, including BA, must vote with the majority. This worked well when the group's shares were evenly held.

However, cracks have appeared because BA is now forced to vote with Caja on everything. Broughton and BA argue this effectively gives control of 34% to Caja, breaching the 29% threshold after which shareholders must bid for all the shares.

Broughton said: 'We think they are obliged to make a bid for the whole of it because they control 34%, but they think they don't have to. We want to renegotiate the shareholder agreement.'

Caja's block on the BA/TPG proposal signalled a protectionist approach to keeping the Spanish flag carrier in the hands of local investors.

However, without an international partner like BA, Broughton reckons Iberia could become the next Alitalia, the Italian airline that is struggling to find a suitor.

He believes that far from damaging Iberia's strong position at Baracas Airport in Madrid, it would be in BA's interests to help grow the hub because it is capacity constrained at Heathrow.

'We have spoken to both the Madrid government and the Spanish government about this,' he said, claiming BA's top brass had sought to ease any national concerns about retaining Baracas as a major hub.

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Also, Broughton said there are very few routes where the two carriers compete - BA's strong network between London and the US would be complementary to Iberia's strong Latin American network.

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