CORRECTED - UPDATE 2-British Airways, Iberia shareholders back merger

(Removes incorrect $8 billion figure from first paragraph)

* Merger approved at shareholder meetings in London, Madrid

* Iberia boss says merged group to drive consolidation

* BA CEO downplays concerns on Spain’s economic problems

* BA shares down 2.2 pct; Iberia 1.5 pct lower (Adds BA, Iberia, analyst comments; shares; details)

Rhys Jones and Tracy Rucinski

LONDON/MADRID, Nov 29 (Reuters) - British Airways BAY.L and Spain's Iberia IBLA.MC got shareholders' stamp of approval for their merger, opening the door to their plans to buy up other players in the airline sector.

The two firms, which announced merger plans in April, said investors had backed the combination at separate meetings on Monday.

BA and Iberia will become International Airlines Group when the deal is completed in late January. Shares in the new company, which will have a combined market value of around $9 billion, will be listed in London and Madrid.

The two airlines recently said they had identified possible acquisition targets to pursue once they have merged, with Asia seen as a key region for expansion.

“I think we have a magnificent vehicle to be in the driving seat of sector consolidation,” Iberia Chairman Antonio Vazquez told reporters after its shareholders’ meeting in Madrid, but said the company was not yet in talks with any potential partners.

BA Chief Executive Willie Walsh downplayed concerns about Spain’s economic problems and highlighted the strength of Iberia’s Latin American network.

“This merger is good news for passengers in the long-term,” Travelsupermarket analyst Peter Smith said.

“The network of destinations available when booking with BA will increase by around 40 percent as Iberia’s extensive Latin American, Spanish Caribbean and Spanish routes are incorporated into the overall offering.”


Timeline on BA, Iberia merger [ID:nLDE6AS1LI]

Factbox on merger [ID:nLDE6AS1NE]



BA shares in London were down 2.2 percent at 266 pence by 1438 GMT, while Iberia shares were 1.5 percent lower at 3.18 euros.

After the merger is rubberstamped, the Unite union said BA cabin crew would be balloted on whether to hold further strikes in a long-running dispute over changes to working practice which has already cost the airline some 150 million pounds.

Cabin crew have already held a series of walkouts over the disagreement which began in November.

The pair’s tie-up was all but secured in June when the British airline agreed a recovery plan for its 3.7 billion pound pension deficit, removing one of the deal’s main stumbling blocks to the deal and ending more than two years of merger talks. [ID:nLDE63707M]

In September, BA, Iberia and AMR Corp's AMR.N American Airlines signed off on a long-awaited strategic alliance that will see them cooperate on flights between Europe and North America. [ID:nLDE68S07H]

Faced with mounting competition from low-cost, no-frills upstarts, the notoriously low-margin airline industry has been going through a period of rapid consolidation and analysts believe larger carriers now need partners to stay ahead of the competition. [ID:nN28155193]

More than 99 percent of the British carriers’ shareholders approved the deal, although the turnout at the vote in London was hit by a public-transport strike.

The BA-Iberia tie-up is expected to generate cost savings of 400 million euros after the fifth year. (Additional reporting by Mark Potter; Editing by Julie Crust and Karen Foster)