British Airways and Iberia in merger talks

(31 July 2008)

British Airways is in talks with Spain's national carrier Iberia over a merger which could cost €5 billion (£3.95 billion).

Both airlines would retain their own brands as part of the combined group, which would become the biggest airline in Europe.

British Airways and Iberia already have a ten year history of co-operation through code-sharing, and are both members of the Oneworld alliance.

However, rival airlines Air France-KLM and German carrier Lufthansa are mulling over separate bids for Iberia.

It is expected to take several months to finalise the terms of any proposed merger, although the European Union has already granted the two airlines approval to co-operate.