British Air, Iberia Merge

Mayank Mehta
12 Nov, 2009
New York City

UK stocks closed higher. British Airways is in merger talks with Iberian, Spain based airliners. Iberian shareholders will control 45% of the merged airline and 54% holding will be controlled by BA shareholders. Trinity Mirror climbed on the outlook.

[R]10:00 PM London, 6:00 PM New York – UK stocks closed higher. British Airways is in merger talks with Iberian, Spain based airliners. Iberian shareholders will control 46% of the merged airline and the 54% controlled by BA. Trinity Mirror climbed on the outlook.[/R]

UK stocks edged higher despite the weakness in commodities prices. British Airways gained after the airline and Spain based Iberia are in negotiations to merge. BT gained after it estimated higher earnings on lower than expected fall in sales and cost cutting. Trinity Mirror climbed on the outlook.

In London FTSE 100 Index closed higher 24.00 or 0.4% to 5,290.75 and the pound edged lower to close at $1.656 and edged higher against the euro to close at €1.109.

British Air shareholders will receive one share in the newly merged company and Iberian shareholders will receive 1.025 share for every share held in the respective airlines. According to the companies the merger is expected to save 400 million euros according to companies.

The merged carrier will have 419 aircrafts and employ 60,282 people and generate revenue of £13.4 billion or 15 billion euros.

Gainers & Losers

3i Group plc decreased 4.9% to 265.10 pence after the equity firm said first-half net loss was £59 million or 7.1 pence per diluted share compared to net loss of £143 million or 23.4 pence per share a year ago.

AGA Rangemaster Group Plc climbed 2.6% to 118.00 pence after the upmarket cooker maker said orders in the second half are running above the first half level and a year ago period.

Aveva Group Plc increased 6.2% to 972.50 pence an engineering software firm said first-half revenues fell 6.6% to £69.9 million from £74.8 million a year ago. Net profit for the first-half fell 24.3% to £15.6 million or 22.87 pence per diluted share compared to net profit of £20.6 million or 30.34 pence per share a year ago.

BBA Aviation plc increased 8.7% to 166.00 pence after the aircraft services group after the group reiterated its business outlook for the current period and said it is in-line with management expectations.

BT Group plc added 4.8% to 23.44 pence after the telecom company said first-half revenues fell 1.7% to £10.31 billion from £10.48 billion a year ago. Net profit for the first-half fell 15.4% to £642 million or 8.1 pence per diluted share compared to net profit of £759 million or 9.7 pence per share a year ago.

Dairy Crest Group plc fell 3.1% to 395.10 pence after the dairy products company said first-half revenues fell 1% to £803.7 million from £808.2 million a year ago. Net profit for the first-half rose 292% to £24.7 million or 18.3 pence per diluted share compared to net profit of £6.3 million or 4.7 pence per share a year ago.

Debenhams plc rose 2.9% to 84.45 pence after the department store chain agreed to acquire Denmark based Wessell & Vett, Magasin du Nord from Magillum A/S for DKK 101 million (GBP 12.3 million).

The Edinburgh Investment Trust plc the investment manager rose 0.2% to 355.90 pence.

Eurasian Natural Resources Corporation PLC fell 2.8% to 896.50 pence and the miner reiterated that its production are running at the same level guided for the second half at the end of the first half in Kazakhstan, and Tuoli.

Galiform Plc surged 9.4% to 89.30 pence after the joinery company guided cautiously optimistic outlook.

HSBC Infrastructure Company Limited fell 0.9% to 115.90 pence an infrastructure investment company said first-half revenues rose 153.5% to £55.0 million from £21.7 million a year ago. Net profit for the first-half rose 1,682% to £19.6 million or 5.5 pence per diluted share compared to net profit of £1.1 million or 0.4 pence per share a year ago.

Keller Group plc rose 1.8% to 708.50 pence and the engineering firm reiterated its second quarter outlook is steady after declining 22% from a year ago on a comparable basis in the first half.

Resolution Limited rose 0.2% to 97.40 pence.

Rio Tinto plc dropped 0.8% to 3,091.00 pence on weak commodities prices after cautious comments from Chinese premier.

Serco Group plc decreased 1.7% to 524.00 pence after the outsourcing group is on track to meet its yearly guidance. The company has won £1 billion of contracts so far in the second half, bringing the total for the year to date to £4.5 billion, comprising signed contracts valued at £3.4 billion and preferred bidder appointments valued at £1.1 billion.

Synergy Health plc rose 1.3% to 616.00 pence after the health services firm said first-half revenues rose 7% to £142.65 million from £133.09 million a year ago. Net profit for the first-half rose 44% to £8.99 million or 16.34 pence per diluted share compared to net profit of £6.23 million or 11.36 pence per share a year ago.

Trinity Mirror plc increased 6.5% to 179.70 pence and the company said revenues in the four months to October declined 20% and reiterated that annual results are in line with management expectations.

United Utilities Group PLC the utility company advanced 1% to 467.00 pence.

Vodafone Group Plc rose 1.4% to 136.15 pence and the mobile telecommunications and Chunghwa Telecom of Taiwan signed roaming arrangements.

WH Smith PLC gained 1.3% to 517.00 pence after the retail company said total group sales in the first ten weeks of the financial year fell 1% compared to the same period last year. Travel like-for-like sales fell 2%, in line with our expectations.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 64 increased, 37 declined and 1 were unchanged.

3i Group Plc decliners in the FTSE 100 index with a loss of 3.87% followed by losses in The Royal Bank of Scotland Group Plc of 3.28%, in Amec Plc of 3.06%, in Eurasian Natural Resources Corporation Plc of 2.60%, in Resolution Limited of 2.16%.

British Airways Plc led gainers in the FTSE 100 index with a rise of 8.35% followed by increase in Inmarsat Plc of 6.31%, in BT Group Plc of 5.00%, in Whitbread Plc of 4.48%, in Wolseley Plc of 3.65%.