The stock was off 9.58 percent at 1145 GMT at 1.51 euros in a market that was down 0.73 percent. Iberia shares had fallen more than 10 percent in the morning.
Iberia said Thursday it expected to record a net loss for 2009 if the current "exceptionally difficult" market conditions persist.
It also approved the outlines of a cost-reduction plan "to minimise the adverse impact of the economic crisis."
Spanish media said the airline may unveil a staff reduction plan.
Such a move could complicate its merger with BA, announced last July and which would create the world's third-biggest airline by revenue.
The business daily Cinco Dias said the board of Iberia had noted "a block" in the negotiations with the British airline.
The Spanish flag carrier in February announced its 2008 net profit plunged 90 percent to 32 million euros (42 million dollars) as the global economic crisis undercut demand. It is to announce its first quarter results on May 12.
Source: AFP Global Edition