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2 air carriers to create alliance

American teams up with British Airways on transatlantic routes.

August 15, 2008|From Bloomberg News

American Airlines and British Airways agreed Thursday to create an alliance that would let them operate as a single carrier on transatlantic routes and counter new competitors.

The airlines said they would seek antitrust clearance to coordinate prices, capacity, schedules and routes and share revenue on flights between Europe and North America.

The move marks the third bid since 1996 for closer ties between AMR Corp.'s American and British Airways, which dropped their last attempt in 2002 when U.S. regulators signaled that approval would hinge on ceding flights at London's Heathrow airport. The airport, Europe's busiest, has since been opened to other airlines.

"The big problem was Heathrow, and since that situation has changed I think there's a pretty good chance it'll be approved," said David Swierenga, president of consulting firm AeroEcon in Round Rock, Texas.

American and British Airways said their venture would boost sales and eliminate duplication, helping them blunt higher fuel prices and grab market share from Air France-KLM Group and Delta Air Lines Inc., which won immunity for an alliance in April.

The two carriers would have 48% of U.S. flights at Heathrow, according to American. The SkyTeam alliance of Air France and Delta has 63% of U.S. service from Paris, while the Star Alliance, led by Deutsche Lufthansa and United Airlines, has 76% of U.S. service from Frankfurt.

The airlines said they would apply to the U.S. Transportation Department for an antitrust exemption and notify authorities in the European Union.

Their accord covers flights among the U.S., Mexico and Canada and the European Union, Switzerland and Norway.

The application also includes Spain's Iberia Lineas Aereas de Espana, Finnair and Royal Jordanian Airlines.

The alliance would coordinate schedules and give travelers more destinations and easier flight connections, said Willie Walsh, 46, chief executive of London-based British Airways.

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