Europe clears BA-Iberia merger

BRUSSELS, July 14 (UPI) -- European Union regulators agreed Wednesday to allow British Airways and Iberia to merge and to form a partnership with American Airlines.

The combination of BA and Spain's Iberia will form a $7.5 billion company expected to save about $530 million a year within five years, despite the companies' intention to keep the brands separate, ABC News reported Wednesday.

The partnership with American Airlines, as part of the Oneworld Alliance, allows for coordination of marketing, sales and flight scheduling.

The airlines said Wednesday they expected approval from the U.S. Department of Transportation sometime this fall.

The European Commission said the merging airlines don't compete directly on a majority of their routes, meaning the combination would not reduce competition that works in the consumer's favor.

Rival airlines also served routes where the airlines do compete, thus preserving competitive pricing, the commission said.