March 26, 2010
Spanish airline Iberia's board meeting ended Thursday without a decision on its tie-up with British Airways but a spokesman said he still expects a merger announcement this month.

Some expected the meeting to set a date for the merger to create the world's third largest airline by revenues, behind Air France-KLM and Lufthansa.

Both carriers have said they would sign a definitive deal by the end of March but BA has been hit by a three-day cabin crew strike earlier this week.

BA hopes to avert a second four-day stoppage from Saturday, grounding flights before the Easter holidays. The dispute centers on cost cuts and staffing levels.

"(Iberia) is likely to use the BA cabin strike as an excuse for delaying the announcement, but we still expect a deal soon," said one analyst in Spain.

Struggling against a sharp industry downturn and rising low-cost competition, the two loss-making airlines hope to fly the merged entity with 419 aircraft by the end of the year.

The main stumbling block to the merger will be an agreement on how to address BA's pension fund deficit which analysts believe stands at around GBP£3.7 billion pounds (USD$5.5 billion).

Last week, BA struck a deal with unions on its pension scheme in a first step towards addressing its yawning pension deficit.

(Reuters)