I think it'll be interesting to see how this one plays out. If they get the deal done and that is by far a done deal (anyone remember the Alitalia KLM merger talks in the '90s?), they could stand to benefit a lot.
If you ask around in the business world, the KLM/AF merger is nearly a picture perfect example in how to merge to businesses and make money, while keeping their own identity and brand image. But then I think the Dutch and French are a lot closer in "the way they do business" than I think the English and Spanish are.
Other problem is the financial situation both airlines are in at this moment in time and the problems with a workforce who (like the management) are playing "hardball".
I'm going to be sitting by the sidelines and enjoying the show, where's my bag of crisps?