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Short positions in British Airways (OTC:BAIRY) increased significantly over the summer, with the percentage of the airline's Shares Outstanding on loan (%SOOL) increasing from 5% in April to 20% in July. As you can see from the graph below, short investors came to the trade fairly early, and perhaps closed out their positions too far ahead of the fall in share price, which the Financial Times reported this morning is threatening to undermine negotiations with Iberia, the Spanish flag carrier.

Short positions have increased in Iberia (OTC:IBRLF), with the %SOOL increasing from 2% to 3.5% over the last week. On the whole, however, investors have closed out their positions and short interest is well off the three-year high of 6% in May 2008.

click to enlarge

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Source: Short Interest: Up in Iberia, Down in British Airways