Second Tranche of Investment in Iberia Paid

British Airways PLC
17 March 2000


SECOND TRANCHE OF INVESTMENT IN IBERIA PAID

Madrid, Friday, March 17, 2000:  British Airways today paid the
second and final instalment of its investment in Iberia Lineas
Aereas de Espana SA, following the agreement signed in December
with SEPI, the Spanish government agency responsible for Iberia.

This means that British Airways has now completed its
acquisition of 9 per cent of the shares in Iberia.  American
Airlines has taken a 1 per cent holding in Iberia.

The value of British Airways' investment will be in the region
of £155 million (Ptas 41 billion). If the value of shares in
Iberia offered through its public flotation is less, the sum
paid by British Airways will be reduced accordingly.

British Airways paid the first half of its investment in
December.  The remaining 50 per cent was paid in cash today.

Through its investment, British Airways will be Iberia's key
industrial partner and will have the right to appoint two
directors to Iberia's 12 person board as well as representation
on all Board sub-committees.

Following today's second payment, British Airways' two nominee
directors will take their place on the Iberia Board - Roger
Maynard, its Director of Investments and Joint Ventures, and the
Rt Hon Lord Garel-Jones, UK Foreign Minister from 1990 to 1993
and now a Managing Director of investment bankers Warburg Dillon
Read.

British Airways will be working very closely with SEPI, the
institutional investors and Iberia's management to support the
privatisation process and drive the future business strategy.

Lord Marshall, British Airways' Chairman and Chief Executive,
said: 'After extensive discussions with all relevant parties, I
am delighted that we have been able to finalise all arrangements
for British Airways to complete its investment in Iberia.   We
look forward to working with our fellow core shareholders and
with SEPI towards a successful public flotation of Iberia in the
near future.'

Notes to editors:

In December, British Airways concluded a shareholders' agreement
with the institutional investors who will hold 30 per cent of
Iberia's shares - Caja Madrid, the BBV bank, Logista, El Corte
Ingles and the Ahorro Corporation.  They will, between them,
have four members on the Iberia Board.

British Airways and Iberia in February 1999 signed an agreement
under which they plan to co-operate in a wide area of activities, 
including code-sharing on flights beyond the UK and Spain, and 
reciprocal participation in frequent flyer programmes.  These 
links have already started,with code-sharing introduced on 14 
routes in mid June and Iberia joining the oneworld global airline 
alliance on September 1.  A project board is now in place to 
steer further developments ahead.  The two airlines will share 
best practice in all aspects of their business to help deliver 
the highest level of customer service and value for money, in 
what is becoming an ever more competitive global market.

These agreements will offer British Airways' passengers a wider
choice of services to and within the Iberian peninsular and
beyond, particularly to South America, where Iberia is the
leading carrier.  Iberia's customers will have more easy access
to the extensive worldwide network served by British Airways,
the world's leading international airline, and those of its
fellow oneworld members.

Until today, SEPI, the Spanish state holding company, owned 93.9
per cent of its shares (now reduced to 53.9 per cent), with the
remaining 6.1 per cent owned by Iberia's employees.

Iberia and its subsidiaries operate a fleet of 222 aircraft,
serving 97 scheduled destinations.  Last year, it carried 26
million passengers.  The group employs 29,000 people,  and is
expected to report group gross profits of some Pesetas 31,200
million on an estimated  turnover of Pesetas 650,000 million in
its latest financial year.  It owns 100 per cent of regional
airlines Binter Canarias and Binter Mediterraneo, and the
majority of the newly founded tour operator Viva Tours.

British Airways and its subsidiaries operate a fleet of 340
aircraft, serving 258 destinations worldwide.  In its latest
financial year, it carried 45 million passengers and 855,000
tonnes of cargo.  It employs 65,000 people, and reported pre-tax
profits of £225 million in 1998-99, on a turnover of £8,915
million.  One hundred per cent of its shares are owned by
private investors, quoted on the London and New York Stock
Exchanges.  It owns 25 per cent of Qantas, 79 per cent of Air
Liberte, 100 per cent of Deutsche BA and Go, and 18 per cent of
Comair. It is a founder member of the oneworld alliance.

Roger Maynard joined British Airways in May 1987 as Vice-
President Commercial Affairs North America, based in Washington
DC.  He subsequently transferred to New York to become Executive
Vice-President North America, co-ordinating British Airways'
entire operation across the continent.  Before taking up his
current position in 1995, he had served at British Airways' head
office in London as Director of Investor Relations and
Marketplace Performance, and then as Director of Corporate
Strategy, covering the development of the company's global
alliance strategy. He serves as one of British Airways'
nominated directors on the Board of Qantas Airways Limited.
Before joining British Airways, he served as Counsellor,
Aviation and Shipping, at the British Embassy in Washington DC
from 1982 to 1987.  He was Assistant Secretary for Aerospace in
the UK Government Department of Trade and Industry in London
from 1979 to 1982.  He is a graduate of Queen's College,
Cambridge.

As Tristan Garel-Jones, Lord Garel-Jones was appointed Minister
of State at the Foreign and Commonwealth Office in 1990, acting
as Minister for Europe, handling the Maastricht Treaty.  After
14 years as a Member of Parliament, representing Watford, he
left the Government at his own request in 1993 to pursue a
business career.  He is currently a managing director of Warburg
Dillon Read, the UBS subsidiary. A fluent Spanish speaker, he is
a graduate of Madrid University.