London  - British Airways (BA) and Spanish airline Iberia said Tuesday they were in talks about a possible merger that would help both companies in the "current economic environment."

The firms said the British Airways and Iberia brands would be retained as part of a combined group.

However, it would take several months to reach an agreement on the terms of a possible merger.

BA chief executive Willie Walsh said the proposed merger would help the airlines in the current economic environment.

BA's share price rose by 8 per cent in London on the news.

British Airways, which already owns 10 per cent of Iberia, confirmed in May last year it was part of a consortium looking at bidding for the Spanish carrier. (dpa)