A merger between British Airways and Spain's Iberia is unlikely to be agreed this week, an industry source said on Thursday, after a news report said a deal was set to be announced.
"The talks are still going on and there is no imminent announcement scheduled," said the source, who declined to be named.
Britain's Sky News on Wednesday reported a merger agreement could be concluded as early as this week after the two airlines resolved sticking points including who would run the combined company, citing unidentified sources.
A BA spokeswoman said that no decision had been taken yet over the merger.
"Talks continue between British Airways and Iberia with a view to a merger," she said.
"No decisions have been taken and, at this time, there can be no guarantee that a transaction will be forthcoming. A further announcement will be made in due course, if appropriate."
Airlines are being forced to merge and cut costs as well as seat prices to cope with the industry's biggest downturn in decades.
BA has been in merger talks with Iberia for a year and has also applied to US and European authorities for competition clearance, or anti-trust immunity, which would allow it to share costs and revenues on transatlantic routes with Iberia and American Airlines.
BA's chief executive Willie Walsh on Friday said a decision on BA's proposed merger with Iberia would likely come "in the very near future".
Walsh also added he was "confident in the strength" of BA's case to win US Department of Transportation approval for a sales tie-up with American Airlines and Iberia.
Some analysts believe Walsh's positive comments mean a deal could be agreed in the coming weeks.
"Walsh last week said that corporate governance progress has been made on the Iberia deal. We made the comment then that it sounds to us that this will happen over the coming weeks," said Davy stockbrokers analyst Stephen Furlong.
Word that the merger negotiations between BA and Iberia could be drawing to a conclusion came as Air France-KLM – formed from a Franco-Dutch merger in 2004 — said it would cut ticket prices as part of a shake-up of medium-haul services.
Iberia is scheduled to report nine-month earnings on Friday.