Air France KLM (AF-KLM) is considering a possible bid for Iberia and is in talks with Apax Partners, a UK private equity company, over a formal offer.
The move comes as the Spanish national carrier finally agreed to open its books to a consortium led by BA and US private equity group TPG Capital which has already made a bid.
AF-KLM, in a short, carefully worded statement, confirmed its intention to "take an active part in the consolidation process in the air transport industry."
It added: "In Europe, Spain is a one of the major markets and Iberia an important player in air transport.
"Taken in the perspective of much-needed consolidation for the efficiency and profitability of the air transport sector, it is therefore quite normal for it to be examined among others."
The Spanish newspaper El Economista said that AF-KLM was planning to join a consortium led by Apax which was ready to offer 3.81bn for Iberia, Europe's fourth largest carrier.
This is higher than the 3.4bn TPG offered earlier this year.
There was also speculation that two Spanish partners would join the Apax bid, José Manuel Lara, a prominent publisher and Juan Abelló, a major and wealthy Spanish investor.
Bids for Iberia require a Spanish element otherwise there is a risk that the airline will lose lucrative bi-lateral deals with Latin American countries.
The board of Iberia agreed to "make the delivery of all the information" requested by the TPG/BA consortium as long as a "formal and binding offer" resulted.
The board is understood to be hoping for formal bids of more than 4 a share.
The bid by the TPG/BA consortium which includes three Spanish partners, private equity group Vista Capital, which belongs to Santander, Spain's largest bank, Ibersuizas and Quercus is for 3.60 a share.
However BA and Iberia are partners in the oneworld alliance while AF-KLM belong to the rival SkyTeam. BA also holds 10% of Iberia and has an option to buy a further 26.5%.
* At BA's annual general meeting in London this week Willie Walsh, the airline's ceo, said the AF-KLM interest in Iberia was "irrelevant" to BA.
* see BTE's recruitment site www.businesstraveljobs.com