BA declines to raise Iberia stake

British Airways today said it would not exercise its right to take a greater slice of Spanish airline Iberia.

BA’s decision not to take up the holdings of BBVA and Logista ended speculation it could work with private equity group TPG on a takeover of the airline.

The stakes are likely to go to Caja Madrid, the Spanish savings bank which owns 9.9% of the business. Financial services group BBVA and logistics firm Logista - who own 7.3% and 6.7% of Iberia respectively – had said they wanted to sell their shares to Caja Madrid.

BA acquired its 9.95% holding in Iberia as part of a joint investment made with American Airlines in 1999. At that time it was agreed that if any of the core shareholders in Iberia wanted to sell their shares, the remaining core shareholders had the right to buy.

Iberia is Spain’s largest air transport group and the fourth-largest in Europe. It is also a significant provider of services on routes between Europe and Latin America, with the most flights and destinations. The group employs around 25,000 people.

BA chief financial officer Keith Williams said: “British Airways’ position as Iberia’s key industrial partner remains important and is not dependent on an increase in shareholding. We will enter into discussions with Caja Madrid in order to maximise the value of our relationship with Iberia.”

BA had previously ruled out making a bid of its own for Iberia, but said in May it could work in conjunction with buy-out groups such as TPG.