When British Airways and Iberia started merger talks last July, the former’s market capitalisation was almost twice that of its prey. But following Monday’s profit warning and 8 per cent fall in its shares, BA’s market capitalisation, at €1.6bn, is €150m less than Iberia’s. Since Willie Walsh, BA’s chief executive, warned last week that he would not try to merge with Iberia on the basis of BA’s shrunken market value, the deal is presumably in trouble. Mr Walsh has already dropped one deal, after a proposed merger with Qantas fell apart in December. He can ill afford to let Iberia out of his grasp.

To be fair, BA has been hard hit by the financial crisis. All carriers have suffered. But BA is particularly exposed: via the collapse in financial services, given the number of bankers that once flew between London and New York; and by virtue of the fact that it reports in sterling. In addition, relative airline valuations tend to circle each other through the economic cycle. In 2001, Lufthansa was Europe’s biggest airline. Then BA briefly took the top slot. For a moment in 2007, Air France was top dog. Even so, airline investors no longer talk about Europe’s “big three”. Now it is the “big two” – Lufthansa and Air France. After them come the also-rans, such as BA and the rest.