BA to accept 50-50 ownership in Iberia merger - paper

MADRID, July 13 (Reuters) - British Airways (BAY.L) is ready to accept close to a 50-50 ownership deal for a merger with Iberia (IBLA.MC), Spanish newspaper El Economista said on Monday, citing sources close to the talks.

In exchange, the Spanish airline is prepared to shoulder its share of a shortfall in BA's pension fund, the paper said.

The financial headquarters of the new group would be located in Madrid, added the sources.

Both Iberia and its main shareholder, Spanish savings bank Caja Madrid [CAJAM.UL], declined to comment on whether they had received an improved offer from BA.

British Airways and Iberia have been in merger talks for a year but the ownership split has proved an obstacle.

BA has been dogged by a yawning pensions deficit [ID:nLS751001], seen as another stumbling block to the deal.

But El Economista's report comes after the chairman of Iberia stepped down on Thursday and was replaced by proven dealmaker Antonio Vazquez, an appointment seen as boosting merger chances.

Meanwhile, BA has secured shareholder backing for a possible rights issue, British weekly newspaper the Observer said on Sunday. [ID:nLC377887] (Reporting by Sarah Morris; Editing by Greg Mahlich)