British Airways’ merger with Iberia has been cleared by the European regulatory authority and should go ahead in December, creating the world’s third-largest airline.

The European Commission ruled the merger would not impede competition. In a statement it said: “The merged entity will continue to be subject to competition from a number of competitors.”

The move will put the merged carrier on a par with major rivals Air France-KLM and the Lufthansa Group.

The ruling also brings BA closer to a tightened relationship with American Airlines, a move vigorously opposed by Virgin Atlantic. However, that alliance still awaits anti-trust immunity in the US that would allow the airlines to coordinate fares and services.