By Steve Goldstein

LONDON (Dow Jones) -- European airline consolidation nudged forward Friday, as Lufthansa made a bid for the publicly traded shares of Austrian Airlines and Iberia Lineas Aereas de Espana said it was still in talks with British Airways.

Already, Air France and KLM have merged into Air France-KLM and Lufthansa has acquired Swiss, among other European airline deals.

British Airways has been in talks with several partners, and still has active merger talks with Spain's Iberia as well as an application for antitrust immunity to cooperate with AMR Corp.'s (AMR) American Airlines.

The BA-Iberia talks have lumbered on as the two carriers haven't reached a deal on price, with BA's pension liabilities a key sticking point.

Fernando Conte Garcia, chairman and chief executive of Iberia, said on a conference call that the valuation debate is still continuing. He expects talks to end next month.

Iberia on Friday said it swung to a fourth-quarter loss of 19 million euros ($24 million) after earning 105 million euros in the year-earlier period.

Revenue fell 3% to 1.37 billion euros.

During the quarter, passenger traffic fell 9%, and the airline's 5% capacity reduction wasn't enough to offset that.

Costs also rose 5% during the quarter.

Garcia said Iberia is in talks to delay the delivery of three Airbus A340s by a year.

Iberia shares slipped 2.7% in Madrid, and have dropped 27% over the last 12 months.

Meanwhile, shares of Austrian Airlines climbed 14% to 3.95 euros after Lufthansa offered 4.49 euros a share for the stock not held by the Austrian government. The deal is contingent on European Union approval for 500 million euros of Austrian state support.

Lufthansa already is due to pay the Austrian government up to 164 million euros for its 41.56% stake, depending on Austrian Airlines' future economic performance and the Lufthansa share outperforming its competitors.

"The European aviation industry is undergoing a fundamental process of change and consolidation," Lufthansa said in a statement on Friday.

"In the future, Austrian Airlines will be in a position to benefit from the economies of scale, market presence and competitive strength of Lufthansa. The integration into the Lufthansa Group's multi-hub system will make the route network more attractive for both partners' customers and secure the connection of Vienna to other European and intercontinental business locations."