British Airways and Spain's Iberia are holding talks on a possible merger, the two airlines have said.

The firms said the British Airways and Iberia brands would be retained as part of a combined group under the plans.

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The companies said it would take several months to reach an agreement on the terms of the merger. The news boosted BA's share price by 8%.

Mr Walsh said the merger was an attractive proposition for BA, which, like other airlines, is struggling with sky-high fuel costs

"The aviation landscape is changing and airline consolidation is long overdue," he said.

The two airlines have a 10-year history of co-operation and are both members of the Oneworld alliance.

BA acquired an 9% stake in Iberia in 1999 and recently increased its holding to 13.2%.

Iberia recently bought a 2.99% stake in BA.

(BBC)

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