BA and Iberia agree formal merger

British Airways and Spanish carrier Iberia have signed a formal agreement for a merger.

The UK carrier - which has been hit by strike action and spiralling costs - had a tentative agreement in place since November. The two airlines are forming a new holding company called International Airlines Group under which both companies will retain their own brands in the same way Air France and KLM have done.

The consolidation of European airlines has been seen as an essential move for the industry.

The new group will operate some 408 aircraft to more than 200 destinations.