labels: British Airways, News reports
After Iberia, BA in talks with American Airlines for three-way alliance news
04 August 2008

London: British Airways (BA) said Monday it was hoping to finalise a deal with its US partner, American Airlines, over the coming weeks that would eventually result in three-way trans-Atlantic combination, with itself, American and Spanish flag carrier, Iberia as partners. Just last week, BA announced it was in merger talks with Iberia.

American Airlines is the world's largest carrier.

Iberia is BA's long standing partner as part of the oneworld Alliance.

According to BA, it expects details of the deal with American to be finalised within two weeks and an application for anti-trust immunity to be filed with US regulators shortly thereafter. Protective airline ownership laws in the United States preclude a full merger between BA and American Airlines. However, an exemption from the anti-competition laws would enable both carriers to conduct trans-Atlantic operations as a single company.

Both BA and American have tried in the past, and failed, to win such immunity. This, mainly for the reason that both carriers dominate London's Heathrow airport, where between themselves they aggregate more than half the capacity to and from the United States,.

However, the situation has changed with the "open skies" agreement between the US and the European Union now allowing airlines to fly to and from any point in the US to any point in the EU and vice versa.

BA and Iberia have said they are confident of gaining European regulatory approval.

American carriers are already in consolidation mode and it was expected that similar moves would emanate in the European continent as well. Worsening operating environment for the airline industry around the world has hastened the process of consolidation.

Meanwhile, BA on Monday revealed a 90.1 per cent drop in Q1 profits and a trimming of its full-year forecast for revenue growth to 3 per cent, instead of 4 per cent.

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After Iberia, BA in talks with American Airlines for three-way alliance