MADRID: British Airways and Spanish flag carrier Iberia yesterday (Tuesday) announced a merger plan which, industry observers believe, could be the harbinger of further consolidation within the European aviation industry.

Long-time partners via the Oneworld marketing alliance, the two airlines already hold stock in each other's companies: BA owns 13.15% of Iberia; the latter holds 2.99% of the UK airline.

Says BA's pugnacious Irish ceo Willie Walsh: "The aviation landscape is changing and airline consolidation is long overdue. The combined balance sheet, anticipated synergies and network fit between the airlines make a merger an attractive proposition, particularly in the current economic environment."

While Iberia chairman/ceo Fernando Conte, hailed the deal, saying that it will "further develop Madrid's position as the European gateway to Latin America."

However, there is as yet no answer to the big question on some observers lips: For how long can Walsh and Conte co-exist in an enlarged tent?

Data sourced from International Herald-Tribune; additional content by WARC staff