Integration of British Airways and Iberia is being held up by the outstanding issue of financial governance over the two carriers, rather than matters relating to merger ratios.
Under the merger plan BA and Iberia would operate as two distinct brands under a single holding firm, 'Topco', which would have strategic and financial control.
BA says the synergy expectations and most of the basic structural details - including senior positions - have been agreed in principle.
But speaking to investors today, chief executive Willie Walsh said: "The single area of difficulty between us relates to governance - specifically in relation to the financial control that Topco can exercise over the two operating companies."
He says BA and Iberia are "very clear" on the potential synergies. Walsh says the carriers have identified the ways to achieve them, and the value they represent - although he declines to give a figure - as well as the timescales within which they can be delivered.
All of the governance issues, he says, with the exception of Topco's financial control, have "effectively been agreed" during negotiations between the companies.
But Walsh says: "Although the principle and concept of control by Topco is understood and accepted, translating that into a formal written agreement has proven to be very difficult, and we do not have agreement on that issue at this point."
He says there is a commonly-held perception that the merger ratio has been the principle issue of concern and disagreement between the carriers. But he states: "I want to assure you, that is not the case."
Walsh says the merger ratio is not an issue "standing in the way" of a final agreement, and says the two sides have also reached in-principle agreements on board constituents, including the positions of chairman, chief executive and chief financial officer.
BA and Iberia are making "good progress" on the tie-up, he stresses, following Iberia's better understanding of BA's pensions situation. "Pensions is not an issue between us," he says.
He also assures that the Iberia merger is "not distracting" BA's executives from the task of running the airline during the current economic crisis, adding: "It's not taking up a lot of management time."
Source: Air Transport Intelligence news
