British Airways and Iberia agree on merger
The merger will create one of the world's biggest airline groups.
BA and the Spanish airline are expected to complete the merger by the end of the year. It was provisionally agreed to in November.
The merger is said to save the airlines £350m a year.
The new company will operate under the name International Airlines Group, but BA and Iberia brands will not be changed.
BA chief executive Willie Walsh told the BBC the merger would benefit customers.
"The merged company will provide customers with a larger combined network," he said.
The group would fly to more than 200 destinations and have 62 million passengers a year, according to BA.
BA is expected to announce its largest annual loss since privatisation, but both airlines are expected to report significant losses.
The merger may allow the airlines to better compete with other large European airlines such as Air France-KLM and Lufthansa.