British Airways today looked to be on the brink of a merger with Spanish airline Iberia after the boards of both firms met to consider a deal.
BA, which announced record first-half losses last week, said both companies were meeting separately to discuss a "potential transaction".
The pair first revealed merger talks in July 2008 although the recession forced the deal to be shelved.
BA - whose shares rose almost 8 per cent today - said no decisions had been taken and there was "no guarantee" of a merger, although reports suggested the outline of a deal could be announced alongside Iberia's results tomorrow.
Both companies have been hit hard by falling air travel in an 18-month period which has seen many smaller airlines go to the wall. A tie-up would put the pair on a firmer footing.
BA also held talks with Australian airline Qantas over a tie-up but the talks ended in December last year after the pair were unable to agree terms.
The two airlines are members of the Oneworld Alliance and already jointly market, or codeshare, on some routes.
BA also owns a 13.15 per cent stake in the Spanish airline, while Iberia has a near-10 per cent stake in the UK carrier.
A merger would create an airline carrying around 60 million passengers a year with a fleet of more than 400 aircraft.
BA, which has a fleet of 246 planes, carried 33 million passengers last year, while Iberia carried 28.5 million travellers and has 174 aircraft.
The UK airline has been locked in a battle with unions over cost-saving plans for much of the year announced a further 1,200 job cuts last week to add to the 3,700 previously planned.
BA made a record pre-tax loss of £292 million for the six months to the end of September with a near-14 per cent slump in revenues.
The airline also made a loss of £401 million in its previous financial year as rising fuel costs and the economic downturn hit home.Reuse content