Comment: Marriage that's been in the air for a decade

Ever since British Airways took what was clearly a strategic stake in Iberia, the industry expectation has always been that one day the flag carriers would merge.

Talks have been held down the years, most recently last summer when BA was part of a consortium attempting to buy its Spanish counterpart. That plan collapsed.

But it's a measure of the drastic situation in which the companies find themselves this year that the 2008 version looks as though it will succeed. They're under attack from all sides - fuel costs, economic downturn, budget competitors, environmentalists. The list of pressures they face is an extensive one. Against that background, something like this had to happen to BA, with Iberia always the likeliest partner. That was certainly the mood of BA chief executive Willie Walsh when I spoke to him in Madrid.

Mr Walsh, a firm believer in there being too many airlines and of the need for consolidation, said the combination of the credit crunch and the fuel price rise made the marriage "a very sensible development".

It's clear that while the combination is being presented as roughly one of equals, the British airline expects to be the senior partner. That is justified by the respective stock market valuations of the two companies.

Iberia has been struggling even more than BA - while the British carrier's share price has fallen, it has been out-performing many of its international rivals.

The driver for the union is the one, three years ago, of KLM and Air France. The other airlines have watched as the Dutch and French companies have successfully come together, retaining their own brand identities but enjoying the benefits of being part of a larger group.

The KLM/Air France merger should mean that BA and Iberia avoid any regulatory pitfalls - if anything the EU, which is anxious to see more such deals in the belief they will enhance competition, will bend over backwards to accommodate the relationship.

Walsh won't put a figure on possible job losses. Clearly, there are bound to be areas of overlap where one airline will stand down in favour of the other. But they are well-matched - BA majors on the north Atlantic, Iberia is busy in the south Atlantic, flying to Latin and South America.

The BA chief said he believed there would be other mergers involving his company. "This is not the end game. It's the start of a new era for us."

BA joining forces with Iberia, he said, "is the first step - it's not the end of our ambition." In the past, it might have been supposed that BA would buy Iberia outright. Those days have long gone but a stronger BA could still result.