British Airways sign deal with Spanish Airline

British Airways and Spanish Airline Iberia, said they have reached a preliminary agreement for a merger expected to be completed in late 2010.



The merger, which must be approved by the European Commission, will create Europe\'s third biggest airline.



Under its terms, Iberia will take a 45 per cent stake and British Airways, which last week reported a six month pre-tax loss of $292 million pounds, will have a 55 per cent stake in the company.



Iberia said it can pull out of the deal if British Airways fail to resolve its pension deficit problem.



Iberia\'s Chairman, Antonio Vazquez will take the same role at the new company, while British Airway’s Chief Executive, Willie Walsh will become Chief Executive of the new company.



News of the deal has not gone down well with Virgin Atlantic, one of British Airway\'s big competitors in the UK, which raised concerns about the new company\'s market share.