British Airways, which is already in merger talks with Iberia, has confirmed it is seeking an alliance deal with American Airlines that could see both airlines effectively running as one trans-Atlantic carrier. A previous attempt by BA and American to strike a similar collaboration failed to gain regulatory approval on breech of competition laws.
However, the airlines are expected to argue that the competitive situation has changed since the “open skies” agreement between the U.S. and the European Union came into force in March, allowing airlines to fly to and from any point in the U.S. and any point in the EU.
The deal is also being sought against a backdrop of soaring fuel prices and slackening demand, conditions that BA chief executive officer Willie Walsh last week described as “the worst trading environment the industry has ever faced.”
BA posted an 88 percent plunge in first quarter pretax profit, prompting the carrier to cut its winter flight schedule and trim its full-year forecast for revenue growth to 3 percent, instead of 4 percent.
BA spokesman Euan Fordyce said that the carrier expected final preparations for a deal to be completed within a fortnight, and an application to U.S. regulators for antitrust immunity to be filed shortly afterward.