It appears that they've been discussing this for a year - slightly more concerning is that they propose to HQ the new company in madrid "for tax purposes" Glad to know my hard earned cash will be helping to prop up the Spainish govt! http://uk.news.yahoo.com/5/20091112/tuk-ba-board-discussing-iberia-merger-45dbed5.html British Airways has confirmed its board is holding a meeting to consider a potential merger deal with Spanish airline Iberia. Skip related content Related photos / videos Enlarge photo A British Airways statement read: "Further to recent market speculation, British Airways confirms that the British Airways and Iberia boards are holding separate meetings today, to consider a potential transaction. "However, no decisions have been taken and, at this time, there can be no guarantee that a transaction will be forthcoming. "A further announcement will be made in due course, if appropriate." Sky News city editor Mark Kleinman broke the news last night that the two airlines were close to a deal. He said: "All being well, a formal intention to merge, along with details of how the new European aviation powerhouse will be structured, could be unveiled later this week to coincide with Iberia's third-quarter results. "The two sides have come to a broad agreement about the key conditions of this deal. Those are issues such as who will run the combined company - likely to be BA chief executive Willie Walsh - and where the company's headquarters will be - my understanding is that they will be based in Madrid for tax purposes. "The key point about this deal is that the two sides will continue to operate as individual airlines with their own brand names." Iberia has confirmed the deal being discussedwould make BA the slightly dominant partner in the deal. The potential merger would give BA a 55% share in the merged company, while Iberia would own 45%. British Airways and Iberia have been in merger talks for almost a year and have applied to the US and European authorities for competition clearance.