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14/08/2008
BA, American Airlines And Iberia Deal Close
British Airways says it has sealed a deal with American Airlines and Spain's Iberia in a controversial merger.
The alliance will allow the carriers to fix fares, routes and schedules together.
It is understood the deal will help the carriers cut costs in the face of rising aviation fuel prices.
However, the airlines will need to persuade the US that the deal does not break US rules on foreign ownership of airlines.
The airlines say they plan to file for anti-trust immunity from the US Department of Transportation.
Under the agreement, the three airlines will co-operate on flights between the US, Mexico and Canada and the EU, Switzerland and Norway.
BA rival Virgin Atlantic say the plan would reduce competition in the airline industry.
Paul Charles, Director of Corporate Communications for Virgin, said that BA and Iberia were "proposing to create the world's biggest airline with American Airlines".
The rival believes BA already has too much power as it is.
It is reported that Virgin Atlantic has pre-emptively written to both US presidential candidates to warn that a deal will be "anticompetitive" on the transatlantic route.
BA has indicated that it would be willing to give up some of its valuable Heathrow slots in a bid to secure the deal.
Chairman and Chief Executive of AMR Corp, the parent company of American Airlines said "our proposed co-operation is an important step towards ensuring that we can compete effectively with rival alliances" as well as "manage through the challenges of record fuel prices and growing economic concerns".
BA Chief Executive Willie Walsh said that "this strategic partnership strengthens competition by providing consumers with easier journeys to more destinations, with better aligned schedules and frequencies".
If approved, the deal will give the airlines a 46% share of all transatlantic flights.
A previous attempt by BA to forge the merger fell through when the carrier was informed it would have to give up 16 flights per day in order to secure anti-trust immunity.
See: BA And Iberia In Merger Talks
(DS)
The alliance will allow the carriers to fix fares, routes and schedules together.
It is understood the deal will help the carriers cut costs in the face of rising aviation fuel prices.
However, the airlines will need to persuade the US that the deal does not break US rules on foreign ownership of airlines.
The airlines say they plan to file for anti-trust immunity from the US Department of Transportation.
Under the agreement, the three airlines will co-operate on flights between the US, Mexico and Canada and the EU, Switzerland and Norway.
BA rival Virgin Atlantic say the plan would reduce competition in the airline industry.
Paul Charles, Director of Corporate Communications for Virgin, said that BA and Iberia were "proposing to create the world's biggest airline with American Airlines".
The rival believes BA already has too much power as it is.
It is reported that Virgin Atlantic has pre-emptively written to both US presidential candidates to warn that a deal will be "anticompetitive" on the transatlantic route.
BA has indicated that it would be willing to give up some of its valuable Heathrow slots in a bid to secure the deal.
Chairman and Chief Executive of AMR Corp, the parent company of American Airlines said "our proposed co-operation is an important step towards ensuring that we can compete effectively with rival alliances" as well as "manage through the challenges of record fuel prices and growing economic concerns".
BA Chief Executive Willie Walsh said that "this strategic partnership strengthens competition by providing consumers with easier journeys to more destinations, with better aligned schedules and frequencies".
If approved, the deal will give the airlines a 46% share of all transatlantic flights.
A previous attempt by BA to forge the merger fell through when the carrier was informed it would have to give up 16 flights per day in order to secure anti-trust immunity.
See: BA And Iberia In Merger Talks
(DS)
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