British Airways and Spanish carrier Iberia have announced a proposed merger in which BA will be the dominant partner. Once the deal gets regulatory backing, British Airways will hold 55% of the new company, and Iberia the remaining 45%.

British Airways made a pre-tax loss of £292 million, with Iberia expecting to announce large losses too. The new airline will be able to field 419 aircraft travelling to over 200 destinations around the globe. It is thought that the merger will result in savings of 400 million Euros for the combined outfit.

The deal will create the world’s third largest airline, with both brands retaining their individual identities. On BBC News today chief executive Willie Walsh said that standards would not fall.

Aviation analyst Douglas McNeil of Astaire Securities said “I think BA will be pleased with the deal they have got – the headquarters in London, led by Willie Walsh, and BA will be majority shareholder.”