Iberia, the Spanish airline, today approved its merger with British Airways, The London Times reported.

At a board meeting, the Spanish airline agreed the new airline will have its financial headquarters in London, according to reports in El Pais, a Spanish daily newspaper.

The merged BA-Iberia carrier will be chaired by Antonio Vazquez, the current chairman of Iberia.

It is also expected that Willie Walsh, BA's chief executive, will retain his role at the merged group. It is not clear what position Martin Broughton, BA’s chairman since 2004, will hold within the merged operation if the U.K. airline board approves the combination.

BA's board is also meeting to discuss the merger.

Earlier today, the company said: "Further to recent market speculation, British Airways confirms that the British Airways and Iberia Boards are holding separate meetings (on Thursday) to consider a potential transaction. However, no decisions have been taken and, at this time, there can be no guarantee that a transaction will be forthcoming. A further announcement will be made in due course, if appropriate."

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