KEY POINTS:
British Airways and its private equity partner, Texas Pacific Group (TPG), are preparing to cut their offer for Iberia airways from the indicative price of 3.60 - £3.4bn in aggregate - reports indicated yesterday.
Sources at the airline were said to believe that the eventual offer price could be"significantly below" the original figure because of the consortium's concerns about the cost of debt, amid the current credit market turmoil, the prospect of falling air fares and the general mood swing away from large private equity groups such as Texas Pacific.
"The real test will come in mid-September when banks have to firm up on their financing," said a source.
A spokesperson for BA said: "The consortium is considering its position based on the amount of information Iberia makes available to it, before deciding the most appropriate way to proceed with its possible bid offer."
The consortium is carrying out due diligence on the Spanish airline, in which British Airways already holds a 10 per cent stake.
The British Airways/ TPG consortium was expected to announce a binding offer by 27 September, the date of the next meeting to be held by the Iberia board.
The consortium expects the in-depth analysis of the airline's books to be completed by mid-September.
- INDEPENDENT
