It has been a long time in the making, but British Airways and the well known Spanish airline, Iberia, have finally announced that they have reached a preliminary agreement for a merger. This announcement came just after a board meeting that took place late last week.

In a joint statement that was released, the two companies said that British Airways will have 55 percent of the new company and Iberia would hold 45 percent. The companies also feel that the merger would create about €400 million of synergies. As of right now British Airways already currently owns 13.5 percent of Iberia. The two carriers also have a code share agreement under the Oneworld alliance. Under this current agreement they have already been allowed to sell seats on each others’ flights for awhile.

The two companies have already noted that Iberia’s current chairman, Antonio Vazquez will be chairman of the new company. British Airways’ Chief executive, Willie Walsh, will be the CEO of the new company.

Although the preliminary agreement has been reached it will still not be formalized until early next year. The deal will not be finalized until the end of next year. The reason why it will take so long to seal the deal comes because of two facts. First of all, Iberia is still concerned about British Airways’ pension deficit. Next, both companies still have to get approval from the European Commission. However, since this is following the successful Air France and KML merger that was seen in 2004, most experts say that this should not prove to be anything to worry about.