Eddington to place merger with Iberia in new BA boss's in-tray

British Airways chief executive Rod Eddington has raised the prospect of a full-blown merger with Iberia sometime next year.

British Airways chief executive Rod Eddington has raised the prospect of a full-blown merger with Iberia sometime next year.

The airline boss, who will retire to his native Australia in September, said that a tie-up with the Spanish carrier could be one of the first big jobs for his successor, Willie Walsh, who was named last week.

But Mr Eddington said that a merger would only happen if talks between Europe and America to free up the international airline market were successful

He said: "When there is genuine liberalisation in the north Atlantic then there is a real opportunity to acquire. Iberia is well managed and well run. We have made no secret of our admiration for them. But it would be wrong to take the view that [a merger] will happen on my watch."

The current international airline rules prevent carriers changing their nationalities. With these restrictions in place, BA would be unable to buy more than 50 per cent of Iberia and merge routes as it would in effect become a British company.

In September 2003 Air France and KLM tied up, but the two airlines are still run as entirely separate businesses, so they don't break the rules. Mr Eddington said that he saw no benefits in doing a similar deal with Iberia.

With the US presidential elections out of the way and new blood in the European Commission, there is renewed optimism that a deal can be brokered on opening up the airline market. "I hope there will be a sensible resolution this year or next," said Mr Eddington.

His successor, Mr Walsh, the former boss of Aer Lingus, will join as chief executive designate on 3 May. While BA is the world's most profitable airline, the two men will focus on ways to cut £300m out of the company's cost base by 2007.

Since August 2001 BA has cut 13,000 jobs, and it is now expected to make further redundancies. Mr Eddington refused to be drawn on numbers, but he said: "The process of talking to the workforce and the unions is already under way."