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IAG worth 6.1 billion pounds on market debut

LONDON, Jan 24, 2011 – International Airlines Group, formed via the merger of British Airways and Iberia of Spain, made its stock market debut on Monday at a valuation of £6.1 billion (7.2 billion euros, $9.7 billion).

IAG\’s shares traded at 285.1 pence shortly after the start of trading on London\’s FTSE 100 index. IAG was up slightly compared with BA\’s final price of 282.5 pence.

The giant merger had completed on Friday, creating Europe\’s second biggest airline by market value behind Lufthansa of Germany. It is set to fly about 60 million passengers a year.

"IAG has a great future ahead of it," IAG chief executive Willie Walsh said in a statement.

"The merger will lead to annual synergies of 400 million euros from year five," he added.

Walsh also reiterated IAG\’s plan to add even more airlines to the new company.

"British Airways and Iberia are the first two airlines in IAG but they won’t be the last. Our goal is for more airlines — but, importantly, the right airlines — to join the group.

"Today is the first step towards creating a multinational multi-brand airline group," he said.

Under IAG, British Airways and Iberia will retain their current operations and individual brands.

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British Airways holds 55 percent of IAG, while Iberia has the remaining 45 percent. A tie-up allows the two carriers to also catch up with Air France-KLM.

BA is set to benefit from Iberia\’s strong presence in Latin America, while the Spanish airline will gain from the British carrier\’s strength in North America and Asia.

"Today a major new player in international aviation has been born and British Airways and Iberia have achieved their ambition of playing a full role in industry consolidation," IAG chairman Antonio Vazquez said on Monday.

"IAG is the third largest scheduled airline group in Europe and the sixth largest in the world, based on revenue.

"Together, Iberia and British Airways fly to over 200 destinations on more than 400 aircraft. They have joint revenues of more than 14 billion euros and last year carried 55 million passengers," he added.

BA and Iberia sought to merge as the global economic downturn and the rise of low-cost airlines resulted in steep losses for traditional carriers.

Since the tie-up announcement last year, the pair have overcome travel chaos due to strikes and the Iceland volcanic ash cloud to each return to profit, indicating the aviation sector\’s recovery after the deep recession.

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