British Airways has given the green light to the proposed merger between Spanish national carrier Iberia and Palma-based Air Europa. BA, is the largest independent shareholder in the Spanish national airline, and has said that the merger would strengthen the Spanish aviation industry. The combined strength of the two airlines will form Europe's fifth biggest carrier. Britain's third biggest tour firm, First Choice, thanks to its agreement with Viajes Barcelo also has a stake in Air Europa which was formed in the middle 1980s by the International Leisure Group owned by Harry Goodman. Air Europa formed part of Goodman's plan for Airlines of Europe having also formed similar carriers in Britain and Italy. Following the collapse of ILG in 1991 Air Europa was taken-over by Jose Hidalgo of Travel Plan and Viajes Halcon, one of Spain's principal travel firms. Under Hidalgo the company was revolutionised by introducing domestic services challenging Iberia's monopoly. The airline also continued to operate its successful charter flights for foreign tour operators. Over the last few years Air Europa has continued to expand adding inter-island flights around the Balearic Islands also charter flights to the United States and the Far East. Analysts see the merger as a strategic move which will effectively mean that Iberia is present in the highly lucrative charter business. If the merger does progress it will naturally lead to some job cuts, possibly in Palma. Airline passengers will no longer be spoilt for choice either. If the two airlines merge it will leave the domestic flight services in the hands of Iberia/Air Europa and Spanair, which is partly owned by SAS. Recently mergers have come to the airline industry with the words only the biggest can survive being especially correct. British Airways itself was involved in merger discussions with KLM but these talks were later dropped. Iberia itself has only been partly privatised with the controlling stake still owned by the Spanish government. It will soon be floated on the stock market and a number of investors, including British Airways, will probably be interested in taking a slice. BA has two directors on the board of Iberia and the airline is a part in the One World globall alliance which also includes Qantas, Cathay Pacific, and American Airlines. But not everyone is pleased with the possible merger.
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