Monday, August 11, 2008

Brittish Airways Preparing for Alliance With American Airlines

British Airways is preparing to surrender its right to hundreds of transatlantic flights in an attempt to win the backing of US authorities for an alliance with American Airlines.

The slots are worth tens of millions of pounds, but BA chief executive Willie Walsh sees it as a price worth paying to secure a three-way tie-up with AA and Spain's Iberia.

The alliance would give the joint venture huge dominance in transatlantic flights.

BA Chief Executive Willie Walsh thinks giving up the slots is a price worth paying for a three-way merger

It would have 46 per cent of all the slots and handle 62 per cent of all transatlantic passengers.

On one route - Heathrow to Houston - the combined group would control 100 per cent of all scheduled flights.

BA will meet US Department of Justice officials early this week and offer to give up the flights.

In return, the airline hopes to win immunity from prosecution under US anti-monopoly laws, allowing it to press ahead with its link-up without-the risk of a lengthy legal battle.

When BA last tried a deal with AA in 2002, it was told it would have to surrender 16 flights a day to win anti-trust immunity.

That figure was deemed too high at the time, but this time round BA hopes to convince US authorities a much lower figure will satisfy their concerns.

BA is planning a full merger with Iberia and wants a deal to share costs and revenues with AA.

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