Thursday, August 14, 2008

American Airlines, Brittish Airways and Iberia Form Codeshare Agreement

LONDON -- British Airways PLC, American Airlines and Spain's Iberia SA said Thursday they have signed a joint business agreement on flights between North America and Europe.

The three airlines said that they planned to file for worldwide antitrust immunity from U.S. authorities for the deal later Thursday. They will also notify European regulatory authorities.

A deal between the trio has long been anticipated -- rival carrier Virgin Atlantic earlier this week sent a pre-emptive letter to both U.S. presidential candidates warning that a deal would be anticompetitive on the lucrative trans-Atlantic route.

BA, AMR Corp.'s American and Iberia argued that a closer relationship on pricing and seat capacity will benefit customers by providing improved connections and flight schedules.

Under the joint business agreement, the three airlines will cooperate commercially on flights between the U.S., Mexico and Canada, and the European Union, Switzerland and Norway while continuing to operate as separate legal entities.

They will expand their codeshare arrangements on flights within and beyond the EU and U.S., significantly increasing the number of destination choices that the airlines can offer customers.

Virgin Atlantic Airways president Richard Branson said earlier this week that he had written to Senators Barack Obama and John McCain to warn that the proposed alliance between British Airways PLC and American Airlines would severely damage competition on trans-Atlantic routes.

Branson said that a closer relationship between the two carriers would result in higher prices for customers and job losses on both sides of the Atlantic, adding it was "very dangerous" to believe that consolidation was the best response to the current difficult economic conditions.

"Just because life is tough out there, you shouldn't rid yourself of competition," Branson told BBC radio.

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