British Airways, the third largest European carrier, and Madrid-based Iberia are discussing a possible merger between the two airlines. Facing higher fuel costs and a slowing economy, airlines are struggling to make a profit and
British Airways CEO Willie Walsh said, “The combined balance sheet, anticipated synergies and network fit between the airlines make a merger an attractive proposition, particularly in the current economic environment.” If the airlines merge, each would continue to fly under its own name.

Iberia’s route network includes extensive service to popular destinations in Latin America such as Buenos Aires and Mexico City. Iberia Chairman Fernando Conte said a merger would “strengthen the oneworld Alliance and further develop Madrid’s position as the European gateway to Latin America.” It would take several months for both airlines to reach an agreement and the companies would need to secure regulatory approval. Both airlines are members of the oneworld alliance and currently operate reciprocal frequent flyer programs.