BA in talks with American and Iberia of alliance
03.07.08
British Airways, American Airlines and Iberia are close to applying for antitrust immunity to form a transatlantic joint venture, the Financial Times said today, citing ‘legal sources’ it did not identify. The airlines aim to reach an agreement on profit and revenue sharing this month, the paper reports, creating a new force dominating capacity between south-east Britain and the United States.
BA said in April it was in discussions with both American and Continental about a potential alliance. A BA spokesman would not comment on whether anti-trust immunity was the goal of the talks, but did confirm that: ‘BA has been in talks with American Airlines for some time. We are looking for closer co-operation, but no decisions have been reached.'
Miguel Blesa, chairman of Iberia's largest shareholder Caja Madrid, said last month Iberia and BA were in talks about an alliance, but not a merger. BA owns 13.5 percent of the Spanish airline, and attempted to acquire it last year. American already has separate agreements with BA and Iberia, but there is as yet no joint venture between the trio.
American and BA have tried and failed to gain antitrust immunity twice before, in 1998 and 2001, but are now likely to tell US regulators that the competitive landscape has been changed by the ‘open skies’ agreement. This allows airlines to access any US city from any point in the EU and vice versa, and opened up access to Heathrow for the first time.
BA and American are also expected to argue that the recent wave of mergers and new alliances has strengthened many of their biggest transatlantic rivals, which already have antitrust immunity with their partners across the North Atlantic.
The deal would allow the airlines to combine nearly all aspects of their operations, including sales, purchasing and marketing, leading to lower costs and greater economies of scale. It may also provide a foundation for a full merger of the carriers should foreign ownership rules in the United States and Spain change.
BA's rival Virgin Atlantic said a deal between BA, AA and Iberia would still be anti-competitive. A spokesman said: ‘It would form a dominant mega-power on transatlantic air routes from two of the largest EU members, forcing up ticket prices for passengers and restricting choice.'
Add to: del.icio.us | Digg it | Newsvine | NowPublic | Reddit
