LONDON: British Airways said it will hold talks later on Thursday with Spanish carrier Iberia about a "potential transaction", following recent reports that the pair could announce a merger deal this week.

"Further to recent market speculation, British Airways confirms that the British Airways and Iberia Boards are holding separate meetings today, 12 November, to consider a potential transaction," BA said in a brief statement.

"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."

A merger of BA and Iberia would create Europe's third-largest aviation group.