Up to 7,000 jobs could go as a result of British Airways’ proposed merger with Iberia, the Spanish flag carrier, prompting unions to demand a meeting with company managements.

Analysts believe that BA and Iberia will aim for cost savings of between £200 million and £400 million a year from their proposed merger.

This would come from a rationalised route network, economies of scale and a reduction in headcount.

The combined airline would be Europe’s largest by passenger numbers, carrying over 60 million people a year and employing 64,000.

Andrew Fitchie, aviation analyst at Collins Stewart, has estimated that the merged airline could eliminate 20 per cent of its administration staff and 10 per cent of other non-flying staff such as ground handlers.

This would be the equivalent of about 6,800 jobs, assuming no pilot or cabin crew redundancies.

Mr Fitchie estimates that there could be a further 5 per cent reduction in procurement costs, delivering total savings of £400 million.

Unite, the union that represents BA’s 14,000 cabin crew, has said it understands the business case for the merger and is supportive of the talks but is seeking a meeting with management to discuss details of the deal.

The union will also meet with worker representatives in Spain to do “due diligence” comparisons in areas such as pay and benefits.

Brian Boyd, national officer for Unite, said: “We understand the impact the fuel crisis has had on airlines and we are mindful of what that might mean for the industry in the long term. But when companies start talking about synergies we get concerned about the impact on jobs so we are seeking a meeting with the companies to discuss their plans.”

Unite is particularly concerned that BA would use cheaper European workers on routes where it previously employed British cabin crew. It is also concerned by wider cost-cutting measures that BA is considering could affect staff benefits and perks.

Jim McAuslan, General Secretary of the British Airline Pilots' Association (BALPA) said: “Consolidation within the airline industry is inevitable and a merger of BA with Iberia makes good sense. We trust the two companies will take their pilots fully into the process and consult with BALPA and the Spanish pilot association very closely indeed.”

BA and Iberia announced they were in merger talks on Tuesday and the proposed deal has won the support of a shareholders and the Spanish government.

Caja Madrid, a savings bank, owns 23 per cent of Iberia and has backed the merger despite blocking an attempt by BA and TPG, the private equity group, to buy the Spanish flag carrier last year. Spain’s economy minister also said the deal would be a “good option” for Iberia.

The merger talks come as all airlines struggle to cope with rapidly rising fuel prices and, in Europe, carriers face the added threat of slowing economies.

Willie Walsh, BA’s chief executive, and Fernando Conte, Iberia’s chairman and chief executive, will spend the next couple of months negotiating the details of the merger. BA will be the dominant partner representing over two-thirds the combined group but no decision has been made on where the headquarters will be or who will run the company.

The brands will remain separate within a new holding company that is likely to be listed in both London and Madrid. BA’s share price rose 6 per cent to 263p yesterday following a 6 per cent rise on Tuesday.

Analysts at Dresdner Kleinwort said that savings from the merger of Air France and KLM were equivalent to 1.6 per cent of revenues and the Lufthansa-Swiss deal had led to savings of 0.8 per cent.

Using these parameters, the bank said, BA-Iberia savings would be between £100 million and £200 million.

The analysts added: “In terms of potential synergies, revenue synergies would focus on cross-selling Iberia's strength on the Latin American routes and BA's strong position on the North Atlantic to the combined customer bases.”

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