British Airways said it has decided to joina group bidding for Spanish airline Iberia led by private equity firm Texas Pacific Group (TPG).

TPG and its partners have already made an indicative bid worth €3.4 billion (US$4.6 billion) for Iberia, or €3.60 per share.

"British Airways has joined with TPG Capital, Vista Capital, Inversiones Ibersuizas and Quercus Equity to investigate a possible consortium offer for Iberia," BA said on Tuesday.

"If a bid was successful, Iberia would remain in Spanish control, and the Spanish investors would put in more than 50 per cent of the total capital investment," said a spokeswoman.

BA already owns 10 per cent of Iberia.

Spanish control

Without Spanish control, Iberia would have to renegotiate airport landing deals with Latin American states, on which its most sought-after routes are based.

"Our stake in Iberia has been very beneficial to BA, and we'd anticipate that continuing," added the spokeswoman. "But we're exploring our options and haven't ruled out anything, including disposing of the stake."

In addition to its 10 per cent holding in the Spanish airline, British Airways has the right of first refusal over another 27 per cent making it a pivotal player in any battle for control.

A bid is not expected until due diligence finishes in two or three months. Iberia is expected to open its books to the consortium any time from now, a source close to the deal said.

- Reuters