Union greets BA-Iberia merger with tough talk on Christmas strike

• Unite insists tie-up should not lead to more job losses
• Willie Walsh dismisses unfair competition claims

The Unite trade union threatened to deepen its industrial dispute with British Airways if the airline cuts more jobs following a £4.3bn merger with Iberia.

The union, which launches a ballot for industrial action over cost-cutting measures next week, has written to the BA chief executive, Willie Walsh, seeking talks over the deal. Airlines also rounded on the proposed tie-up between the British and Spanish national carriers, with Walsh dismissing Virgin Atlantic's warning of unfair competition as "total nonsense."

Steve Turner, Unite national officer for civil aviation, said the pledge of €400m (£357.1m) in cost savings from the deal must not result in further redundancies from BA's 39,000-strong workforce: "We need assurances from the outset from British Airways and Iberia that compulsory redundancies will be avoided and that the new airline will be the best in the business in terms of passenger service.  It is imperative that both companies sit down as soon as possible with the unions here and in Spain to discuss how jobs and standards can be safeguarded."

A BA spokesman said Unite, which represents more than 30,000 BA staff, still backed the merger in principle.

However, Walsh has refused to rule out job cuts among the 60,282 employees brought together by the deal, which will create a business with 419 aircraft flying to 205 destinations. "There will be potential jobs reductions in both organisations," he said.

Unite is balloting 13,000 BA cabin crew in a strike vote over a range of issues including reductions in staffing levels on long-haul flights and a proposal for a two-year pay freeze. If the ballot returns a yes vote, cabin crew can walk out from 21 December and disrupt the Christmas travel plans of hundreds of thousands of passengers.

Iberia underlined why it needs a merger by reporting a loss during its profitable summer trading period. The carrier reported a pre-tax loss of €30.4m (£27.1m) in the three months to September, compared with a €30.4m profit in the same period last year. BA has also suffered heavy losses during its best trading months, recording a record pre-tax deficit of £292m for the six months to 30 September.

Iberia, which has drawn up plans to house its domestic and short-haul operations in a new airline, echoed the pessimistic tone of its merger partner as it warned that the Spanish airline industry is facing "exceptionally difficult circumstances". With the merger not expected to be completed until late 2010, both airlines are pressing ahead with cost-cutting programmes. BA and Iberia will retain their brands and will have separate headquarters in Madrid and London, but the holding company that will ultimately own both businesses will be based in London. Walsh, the proposed boss of the parent company, reiterated yesterday that the deal would not take the "British" out of British Airways.

Douglas McNeill, analyst at Astaire Securities, said basing the operational headquarters in the British capital ensured that the "centre of gravity" of the deal is with BA, compounded by the airline's sharehodlers emerging with 56% of the equity in the new group. However, he said the split of the board, with Iberia's Antonio Vazquez as chairman, represented "checks and balances on executive power."

BA's rivals also criticised the deal, with Virgin Atlantic claiming that BA and Iberia would control 44% of the take-off and landing slots at Heathrow this winter. "It is impossible for any other airline to replicate their scale," said Virgin Atlantic.

A BA spokesman said Iberia's Heathrow slots are already linked to BA through a code-sharing deal that allows BA passengers to choose between BA and Iberia when flying to Spain. "No extra flights would come to the use of BA and Iberia due to the merger," he said.

BA's low-cost rivals, who have aggressively eaten into both airlines' short-haul networks, said the merger would lead to higher fares. Ryanair compared the deal to "two drunks propping each other up" while Sir Stelios Haji-Ioannou, the largest shareholder in easyJet, urged both companies to drop their unprofitable routes and scrap their oldest planes. "These are unprofitable failing businesses that should each do the honest thing," he said.

Contributor

Dan Milmo

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