BA Holder Not Deterred By Lower Stake In Iberia Merger

British Airways PLC's (BAY.LN) largest institutional shareholder Standard Life Investment Thursday said it wouldn't be deterred by the airline accepting a lower stake in a merged company with Iberia Lineas Aereas de Espana SA (IBLA.MC).

Helen Driver, fund manager at Standard Life Investment, said she would prefer BA taking a higher proportion in the merged entity but if the cost saving is sufficient, then a smaller stake would still be acceptable.

When BA originally announced the deal with Iberia in July, it was expected that the U.K. flag carrier would take a 65% to 70% stake in the resulting holding. However, recently, Iberia has surpassed BA in terms of market capitalization, which has forced the Spanish airline's main shareholder Caja Madrid to press for a bigger stake.

Recent Spanish media reports have suggested BA would accept a majority holding of 55%.

Driver said that she didn't think BA's current share price has factored in a merger, adding that the current share price indicated "it wasn't expecting (the merger) to happen."

Company Web site: www.britishairways.com ; www.iberia.es

-By Kaveri Niththyananthan, Dow Jones Newswires; 4420 7842 9299; kaveri.niththyananthan@dowjones.com

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