AFP  -  British Airways said on Tuesday that it was "exploring a potential merger" with Australian rival Qantas Airways, adding that it would continue tie-up talks with Spanish airline Iberia.
  
"In response to recent media speculation, British Airways Plc confirms that it is exploring a potential merger with Qantas Airways Limited via a dual-listed company structure," BA said in a short statement. 
  
"The discussions between British Airways and Iberia are continuing. There is no guarantee that any transaction will be forthcoming and a further announcement will be made in due course, if appropriate," the British carrier added.
  
British Airways and Iberia announced in July they were holding merger talks to create the world's third largest airline in terms of income.
  
The aviation sector is seeking consolidation as airlines fight for survival having been crippled by record high oil prices and as the world faces a deep recession.