British Airways has announced they are holding talks with Iberia to discuss an all-share merger between both companies.

BA currently owns a 13.15 per cent stake in Iberia and the merger, should it take place, will see both brands retained.

British Airways’ chief executive, Willie Walsh, said: “The aviation landscape is changing and airline consolidation is long overdue. The combined balance sheet, anticipated synergies and network fit between the airlines make a merger an attractive proposition, particularly in the current economic environment. We’ve had a successful relationship with Iberia for a decade and are confident that both companies’ shareholders would benefit from the proposed tie-up”.

Talks are expected to last several months.