British Airways and Iberia should complete their merger on schedule before the end of the year, the chairman of the Spanish flag carrier said yesterday.

The merger process is "moving forward at a good pace," Antonio Vazquez told a news conference.

BA and Iberia signed a merger deal on April 8 to create one of the world's biggest airlines to compete more effectively in the fast-consolidating aviation sector.

The tie-up will create Europe's second-biggest airline by market capitalisation after Lufthansa, combining Iberia's strong position in Latin America with BA's presence in Africa, Asia and North America. The merger, which requires regulatory and shareholder approvals, is expected to be completed by late 2010.

"The next step planned is the approval by the competition authorities," Vazquez said.

Another step involves the completion of the agreement between BA and the unions on the problem of employees' pensions before June 30.

"Iberia should formally approve this agreement" within the three-month deadline, he said.

The two companies had signed a preliminary deal last November after lengthy negotiations, but Iberia said at the time it would back out of the agreement if BA's giant pension deficit problem were not resolved.