BA pulls out of Iberia takeover

Iberia is Europe's fourth largest airline

British Airways (BA) has pulled out of plans to increase its stake in Iberia, signalling it no longer wishes to takeover the Spanish airline.

BA, which already owns a 10% stake in Iberia, said it would not exercise its options to buy a further 30% from Spanish firms BBVA and Logista.

The announcement comes six months after BA said it was part of a consortium looking at buying Iberia.

BA said Iberia remained one of its key partner airlines.

'No guarantee'

The UK airline said in May that it had joined forces with private equity groups TPG Capital, Vista Capital, Inversiones Ibersuizas and Quercus Equity.

But BA added in its statement at the time that there was "no guarantee that a formal bid will be made" for Iberia.

German flag carrier Lufthansa also said in May that it remained interested in Iberia, but cautioned that the likely asking price for the Spanish carrier was now too expensive to justify a takeover.

Revenues at Iberia, which employs 25,000 people, were up 10% last year - but profits fell 64%.

Consolidation in the airline industry is expected to continue as the "open skies" agreement between the US and Europe will allow more budget airlines to fly across the Atlantic.