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BG bids for Australia energy firm ... and Spain's Iberia are holding talks on a possible merger, the two airlines have said.

The firms said the British Airways and Iberia brands would be retained as part of a combined group under the plans.

BA boss Willie Walsh said the proposed merger would help the airlines in the current economic environment.

The companies said it would take several months to reach an agreement on the terms of the merger. The news boosted BA's share price by 8%.

Mr Walsh said the merger was an attractive proposition for BA, which, like other airlines, is struggling with sky-high fuel costs

"The aviation landscape is changing and airline consolidation is long overdue," he said.

The two airlines have a 10-year history of co-operation and are both members of the Oneworld alliance.

BA acquired an 9% stake in Iberia in 1999 and recently increased its holding to 13.2%.

Iberia recently bought a 2.99% stake in BA.

(BBC)

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