DealZone

DealZone Daily

British Airways (BAY.L) and Spanish carrier Iberia (IBLA.MC) sign their merger agreement, sealing a long-awaited deal to create the world’s third largest airline by revenue. The deal creates a group with a combined market value of around $8 billion. Read the Reuters story here.

India’s Essar plans a $2.5 billion listing in the United Kingdom. The energy company expects to be included in the FTSE and has hired JPMorgan and Deutsche Bank to help it sell its shares.

UAL Corp’s United Airlines is in merger talks with US Airways in a deal that could create the second-largest carrier in the United States, two sources tell Reuters. Read the story here.

For all Reuters news on deals, click here. Elsewhere in media:

Greeting cards retailer Card Factory is on the verge of a 350 million pounds sale to private equity firm Charterhouse Capital Partners, UK newspaper the Times reports.

Hospital chain HCA Inc is preparing an initial public offering that may raise $3 billion, and plans to interview banks to underwrite the sale in the coming weeks, according to Bloomberg.

from Commentaries:

Consolidation Air, nobody’s favourite airline

JAL/With airlines around the world struggling to survive the economic downturn, the time should be nearing to break the taboo of consolidation in the sector.

Airlines around the globe face losses of $11 billion in 2009, according to IATA. Margins are expected to fall this year and next, with analysts predicting carriers are likely to struggle for years to reach levels needed to produce an acceptable return for capital market investors.

Societe Generale estimated in a recent note that margins would drop to -3.1 percent in 2010 before recovering to 1 percent in 2011, well short of the 10 percent needed.

European airlines merging, U.S. talks to take off next?

airfrance-alitaliaEuropean airline mergers, long expected, are now taking wing.

Air France-KLM in January bought a 25-percent stake in Alitalia after a failed attempt at buying the entire carrier last year. The airline fought it out with Lufthansa, which lost the battle but didn’t sit around moping. It quickly launched Lufthansa Italia, which took its maiden flight a few days ago.

Ryanair, Europe’s largest discount airline, has withdrawn its bid for Aer Lingus after the irish government rejected the $1 billion deal. Ryanair is now expected to look for alternative targets.

British Airways remains in merger talks with Spain’s Iberia. Those talks have become complicated by the pound’s recent slide against the euro, making Iberia’s market capitalization now higher than BA’s.

A British-Iberia merger could squeeze American

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British Airways and Spain’s Iberia are in talks to create the world’s third-largest airline and inject some “long-overdue” consolidation in the industry, in the words of BA CEO Willie Walsh.

Where would a combined BA-Iberia leave American Airlines, which was in talks to form a transatlantic alliance with the two airlines? Would a BA-Iberia merger scuttle American’s chances at an alliance?

The argument for forming an alliance and seeking an antitrust waiver was that the “Open Skies” agreement — which frees up restrictions on carriers flying between the United States and Europe — is set to increase transatlantic competition among airlines. That’s a harder pitch to sell if a BA/Iberian merger, creating Europe’s largest airline, shrinks the number of major players in the market.