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BA and Iberia hold merger talks BA and Iberia agree merger deal
(about 3 hours later)
British Airways (BA) has said that it and Spanish airline Iberia are holding separate board meetings later to discuss some form of merger. British Airways and the Spanish airline Iberia say they have reached a preliminary agreement for a merger.
BA said in a statement that the meetings would consider a "potential transaction" between the two sides. The two airlines have been discussing the deal at separate board meetings throughout the day.
However, it added that no decisions had been taken and there could be no guarantee a deal would take place. Iberia had earlier said the deal under discussion would give it 45% and BA 55% of the new company.
For its part, Iberia said the deal under discussion would give it 45% and BA 55% of a new merged company. BA chief executive Willie Walsh has previously said that a merger would help both firms cope with the current economic downturn.
The firms have considered a tie-up for a number of years, holding talks on the issue in July 2008.The firms have considered a tie-up for a number of years, holding talks on the issue in July 2008.
BA chief executive Willie Walsh has previously said that a merger would help both firms in the current economic climate.
Co-operationCo-operation
In its statement, BA said that a further announcement would be made "in due course, if appropriate".
Iberia said no decision had been taken and there was "no guarantee that a deal will be reached".
Shares in BA were up 15 pence, or 7.5%, at 215p following its announcement, making it the biggest climber on the UK's main share index, the FTSE 100.
BA already owns 13.5% of Iberia, and the two carriers have a code-sharing agreement under the One World grouping of airlines, which allows them to sell seats on each other's services.BA already owns 13.5% of Iberia, and the two carriers have a code-sharing agreement under the One World grouping of airlines, which allows them to sell seats on each other's services.
If a merger is announced, it would still require regulatory approval from the European Commission. If a merger is formalised, it would still require regulatory approval from the European Commission.
However, analysts say a deal is likely to be cleared, pointing to Air France's successful merger with Dutch airline KLM in 2004.However, analysts say a deal is likely to be cleared, pointing to Air France's successful merger with Dutch airline KLM in 2004.
BA's announcement comes a week after it said it would cut a further 1,200 jobs, as it reported a first-half loss for the first time. It made a pre-tax loss of £292m in the six months to the end of September.BA's announcement comes a week after it said it would cut a further 1,200 jobs, as it reported a first-half loss for the first time. It made a pre-tax loss of £292m in the six months to the end of September.
Iberia's most recent results showed that it made a loss of 72.8m euros ($109m; £66m) between April and June.Iberia's most recent results showed that it made a loss of 72.8m euros ($109m; £66m) between April and June.