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British Airways and the largest air carrier of Spain, Iberia, have agreed to merge.
The merger, which is expected to complete by late 2010, would make the alliance the third largest air carrier of the world, in terms of revenue. The alliance would be known under the name of TopCo and would be registered in Madrid. The financial and operational headquarters of the firm will be located in London.
British Airways will hold 55 percent share of the new company and Iberia 45 percent. Each airline will have seven members on the new company's board of directors.
The chairman of the new entity will be Antonio Vazquez, Iberia's current chairman and CEO. His deputy will be current BA chairman Martin Broughton, while the current chief executive officer of British Airways, Willie Walsh, will become TopCo's CEO.
Iberia and BA transported a combined 62 million passengers in 2008 and took in some 15 billion euros ($22.32 billion) in revenue between them.
The new group will have a fleet of 419 aircraft and fly to 205 destinations.
Iberia has reserved the right to pull out of the deal if the outcome of talks between British Airways and trustees of its deficit-ridden pension fund are not concluded to the Spanish company's satisfaction.
BA has been pursuing a merger with Iberia since mid-2008 to create an airline to rival Air France-KLM and Lufthansa.
