British Airways and Iberia agree to $7 billion merger

The boards of British Airways' (BA) and Spain's Iberia have agreed to a $7-billion merger, touted as one of the biggest mergers in the global aviation industry and thus creating Europe's third biggest airline.

Both airlines keep their main base in their home country with their own licenses, certificates, codes and brands.

The merger announcement made yesterday bought in immediate reaction from BA's arch rival Virgin Atlantic, which warned that regulators need to check the growing dominance of BA.

The merger deal had floundered in the initial stages and looked like it would collapse akin to the proposed BA-Qantas deal and BA-American Airlines merger early this year.

Although the BA-American Airlines talks are still continuing, the merger is likely to hit the wall from several regulators.

BA, founded in March 1974 through the merger of BOAC and BEA, said that the new airline group would have 419 aircraft and fly to 205 destinations. In 2008, British Airways and Iberia carried 62 million passengers and, in their last financial years, their joint revenues are approximately € 15 billion.