EU approves BA-Iberia merger

The European Union Wednesday gave regulatory approval to the proposal by British Airways and Iberia to merge and team up with American Airlines to share more of their lucrative transatlantic routes.

The airlines have said the two deals will cut costs and allow them to survive in a tough business climate.

The merger will create Europe's third-largest airline with a stock market value of around $7.5 billion US. The brands will remain unchanged.

The companies have said the deal will save them $530 million a year by the fifth year.

Passenger numbers for both business and leisure travellers have fallen for many airlines in the wake of the global credit squeeze.

BA and Iberia also plan to expand their oneworld alliance with American Airlines, which currently co-ordinates how they sell and operate flights between the 27-nation European Union and the United States.

They will now also jointly manage schedules, capacity and pricing on flights from Canada, Mexico, Puerto Rico, Norway and Switzerland as well.

BA and Iberia said they expect the U.S. Department of Transportation to clear the deal shortly, allowing the airlines to start the joint business in the fall.