British Airways, Iberia Discuss Merger

July 29, 2008 11:22 a.m. EST

London, England (AHN) - To survive the financial turbulence shaking the global aviation industry, British Airways and Iberia are discussing a merger.

The admission on Tuesday is a reversal of BA's stand a year ago that it was not interested in a takeover of the Spanish carrier, but preferred to retain its minority share in Iberia.

British Airways chief executive Willie Walsh explained the airline's turnaround as due to financial changes in the airline industry.

BA purchased in 1999 a 10 percent stake in Iberia and recently upped its shareholding to 13.2 percent. The Spanish air carrier said Tuesday it bought 2.99 percent share in BA.The two airlines have a ten-year agreement as part of the Oneworld alliance.

The disclosure sent BA shares 7 percent higher, while Iberia's shares in Madrid went up 4 percent to $2.65.