BA was scheduled to hold its own directors meeting Thursday, The Times of London Online reported.
The new airline would be chaired by Iberia's current chairman Antonio Vazquez and headquartered in London, The Times said. BA's Chief Executive Officer Willie Walsh would keep the same responsibilities with a merged company.
British Airways said, "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," BA said.