The proposed merger between British Airways and Iberia appeared threatened on Saturday when the UK airline's chief executive Willie Walsh was quoted as saying the current market valuations were unacceptable, according to the Financial Times.

The markets closed on Friday with the Spanish carrier's market value exceeding that of BA's for the first time since merger talks began last July, the FT said.

BA's relative valuation has been hit by a combination of a fall in its share price and the sharp decline of the pound against the euro.

"The present valuation was unacceptable," Walsh was quoted as saying during a visit to India. "Our shareholders would not accept it."

He went on to warn that he did not feel under any pressure to do a deal to create the third-largest European aviation group and he was prepared to walk away "if it made sense."

When the merger talks began, the respective market capitalizations indicated a share exchange ratio of 65 percent for BA and 35 percent for Iberia, the FT said.

This had fallen to only 49.6 percent for BA on Friday and 50.4 percent for Iberia.