You don't need to merge airlines to get huge consolidation savings. Plenty of savings in aircraft purchase/maintenance savings, route rationalisation etc. AF/KLM have proved that already and multiple brands is a well-established and proven practice.
For both airlines it's a question of survival, especiallly since AF/KLM, Ryanair and Easyjet changed the direction of airlines in Europe. What other partner would BA choose for expansion from it's European operations? BA is being attacked by low-cost carriers on one-hand and consolidated of the full-service airlines on the other. It has to respond or die.
Both airlines need massive culture changes to survive but that doesn't alter the justification for the merger. The strategy is right but it's all in the implementation of that strategy. If BA and Iberia staff think they're immune from culture change and the realities of economic life they're sadly mistaken. Overall the merger is right, but real culture change is the key to success. Neither airlines have a great track-record of managing their staff, respecting them and winning their support for genuine business transformation, but that's what they've got to do.
For BA also, if no third LHR runway, they will expand through Madrid which is bad for Britain. They don't want two hubs in a country the size of Britain and in any case they only think in terms of their european hub of LHR. If the facilities don't exist in the UK what are BA meant to do? Once they secure their european operations, they'll do the same in the USA and Asia. Long-term stategy - Oneworld Airlines? Who knows?
airsmiles