The merger of Iberia and British Airways may win the new company important tax advantages.

With its headquarters in Madrid and its financial operations in London, Iberia-BA could be registered for corporation tax in Spain.

Major companies qualify for a corporation tax rate of 30 per cent, which could give BA significant bonuses in comparison with amount of tax it has been paying in the UK to date.

For Spaniards, the merger of its national carrier with BA was last night seen as a bad move. BA has been perceived as a struggling airline which has battled to hold its own in a hostile market.

The difficulties of Iberia are also well known in Spain – it has lost out in the fierce war with the train on major routes. But some Spaniards saw a merger with another troubled partner as against the interests of Iberia.

One person, calling themselves Armageddon, wrote to the website of El Pais newspaper saying: “British Airways is totally ruined. Only the Titanic has more holes than the pension plan than that of BA.”

Jose Manuel Rita Moure, writing to the same newspaper, said: “We continue losing our principal business values. We are going to end up as door men for the worst there is.”

Others, however, saw it as a logical move. Vicente Anton Coll said: “I understand that the fusion of two major companies is only logical in major markets. Or is it not?”

Iberia is viewed in Spain not just as another airline but as a national symbol. However, in recent years it has failed to attract travellers who have opted for budget rivals.

Its image has been transformed into an expensive luxury which most Spaniards, particularly in the midst of a recession, cannot afford.

On the same day news of the merger broke, Iberia also made the rather quieter announcement that it was cutting business fares on the important Madrid-Barcelona route.

Newspapers noted the 35 per cent reduction in the ’air bridge’ ticket would mean it could cost exactly the same to fly with Iberia as to take the high-speed train between the two cities — €129.

But the fare reduction was also seen as an admission of defeat that Iberia had lost the war with the train.

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