The rallying stock market could prove the catalyst for a long-awaited tie up between British Airways and Iberia. The surge in stocks over the past few weeks could help ease the Spanish flag carrier’s fears about BA’s £2.1 billion pension deficit and lead to the long-awaited link-up. The Spanish have long been concerned about the massive deficit, which could soar to nearer £3bn when the results of a revaluation of the fund are revealed next month.

British Airways has entered talks to buy BMI, the second largest carrier at Heathrow Airport. BA Chairman Martin Broughton has held talks in Germany over the weekend with Lufthansa, BMI’s parent company.

Air passengers face stealth fare increases as a raft of airlines levy new charges for checking in more than one bag. British Airways, Virgin Atlantic, American Airlines, Delta and Continential are among those introducing charges to limit baggage in a bid to raise extra revenue. The new charges could typically add £100 to the cost of a holiday for a family of four.

British Airways celebrates 90 years of leading the travel industry, since Transport & Travel Ltd (a precursor to British Airways) launched the world’s first commercial flight which departed from London to Paris on August 25 1919.

British Airways has become the first major European scheduled airline to sell advertising space on its boarding passes as it seeks new revenue to stem record losses. Jaguar has become the first company to advertise on its website, whilst advertising on boarding passes will start in October.

British Airways has given its shareholders the first piece of good news this year by reporting an improvement in passenger volumes and fewer empty seats in July. However premium traffic continued to slide as business passengers downsized to economy.