International Airlines Group has today been formed after British Airways signed a merger with Spanish airlines Iberia.
The merged companies will become one of the largest airlines in the world with over 400 aircraft covering 200 destinations.
Despite this, the British arm of the company remains crippled by strike action taken by its workers whilst the Spanish arm remains in loss to the tune €273m.
Adjusted net debt at Iberia was €1.2bn.
Meanwhile, British Airways which published its traffic results yesterday showed a 11.4 pct decrease in passenger numbers in March after union workers from Unite went on strike.
The company which lost £40-50 million as a result is in continuing talks with Unite over cuts to pay.
Nevertheless, Chief executives of British Airways and Iberia were in good moods today as they formally announced the partnership:
"This is an important step in the process towards creating one of the world's leading global airlines," said Antonio Vasquez of Iberia.
The merger which is still subject to regulatory and shareholder approval will see British Airways shareholders will receive one new share in International Airlines Group whilst Iberia shareholders will receive 1.0205.
Results for the new merged group are still expected to show losses for the immediate future as predicted annualised synergies of €400 million could take up to five years to take affect.
Willie Walsh, British Airways chief executive, said, "The merged company will provide customers with a larger combined network. It will also have greater potential for further growth by optimising the dual hubs of London and Madrid and providing continued investment in new products and services."