British Airways-Iberia tie-up welcomed by Abta

The planned merger between British Airways and Iberia will prove beneficial for consumers, according to Abta - The Travel Association.

A preliminary agreement has been reached for the carriers to merge and form the world's third largest airline.

If the proposal receives approval from the European Commission, the new company could be created by the end of 2010.

British Airways would own a 55 per cent stake in the airline under the terms of the deal, while Iberia will take the remaining 45 per cent share.

Frances Tuke, a spokeswoman for Abta, said that an improvement in the fortunes of two major players in the aviation industry should lead to benefits for consumers.

"British Airways and Iberia have been struggling in the current economic climate," she said.

"The synergy of having the two together, making the whole entity stronger, will only be a good thing for customers."

Response to the planned merger has not been universally positive, with Virgin Atlantic warning that the deal would strengthen British Airways' dominance at Heathrow Airport.