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Speculation was mounting on Thursday afternoon after multiple news agencies claimed that a merger agreement could be fast approaching for bankrupt US carrier, American Airlines and US Airways.The Wall Street Journal, Bloomberg and Reuters all published articles claiming negotiation talks between members of both parties were intensifying raising questions over the potential market share of a merged entity and its impact on other dominant airlines.American Airlines is owned by AMR Corporation and is the third largest airline in the US. In 2011, AMR filed for Chapter 11 reorganisation of American Airlines in the US bankruptcy court. US Airways Group is the fifth biggest US carrier.If both airline companies merged, industry analysts have suggested it could create the world's largest airline based on passenger numbers.This raises serious questions for global airline companies who, were such a deal to go ahead, could find themselves competing with an enlarged rival reeping the rewards of greater economies of scale and offering potentially lower airline tickets. One such air carrier which is likely to be paying close attention is International Airlines Group, the FTSE 100-listed equity, which is the third largest airline in Europe. The carrier, which combines airlines in the UK and in Spain, operates 398 aircraft flying to and from 200 destinations. According to its latest statistics, it transports more than 50m passengers every year.However, in recent months, IAG's Spanish company Iberia has faced setbacks. In the six months to June 30th 2012, Iberia made an operating loss of €263m, working out at approximately €1.0m in operating losses per day. Earlier this month, a union representing members of staff at Iberia rejected a third proposal for a package of cuts aimed at bringing the ailing airline into a profitable position. Today, news reports surfaced claiming that the union members were considering going on strike.MF