It has taken 16 months of haggling over shareholdings, governance and pension-fund deficits to get the British Airways and Iberia merger to the departure gate. But will it be worth it?

The deal will be presented as a great opportunity to drive down costs and boost revenues, strengthening both airlines as the sector struggles with the worst recession to date. It will also allow the combined group to challenge Lufthansa and Air France-KLM for control of Europe’s skies.

BA and Iberia will be able to cut costs in head office functions, maintenance and even catering. Enthusiasts will point to the benefits that have flowed from the Air France-KLM merger.

But that was a combination of two flabby operators in a boom. Willie Walsh, BA’s chief executive, has already slashed costs, cutting another £400 million from its overheads in the past six months. The companies last night predicted savings of €400 million after five years.

There will be some opportunities for boosting revenues. Spanish passengers could be routed on to BA’s network while British passengers will be able to take advantage of Iberia’s Latin American and African routes.

But there are plenty of potential pitfalls. There has been so much going on at BA, Mr Walsh has still not got around to addressing BA’s £3 billion pension fund deficit. Adding another struggling airline to his empire could strain even the workaholic Irishman.

Iberia is regarded in the aviation industry as offering a lower standard of service than BA. Will the merger improve Iberia or will it result in Spanish practices being imported into BA?

Bigger may prove to be better. But stapling together two loss-making airlines does not guarantee that both will improve.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive