American, Iberia, BA Plan Joint Venture - Report

July 3, 2008

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American Airlines, British Airways and Spain's Iberia are close to applying for antitrust immunity to form a joint venture, a newspaper reported on Thursday.

The airlines aim to reach an accord on profit and revenue sharing this month, the Financial Times said, citing the executives of the three airlines.

American and BA are likely to argue a case with US regulators that the competitive landscape has been changed by the "open skies" accord.

The open skies agreement between the United States and the European Union entered into force in March, allowing airlines to access any US city from any point in the EU and vice versa.

The agreement promises to increase competition between carriers, cut ticket prices and to eventually pave the way for transatlantic mergers to create the first global airlines.

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 paper said.

Continental Airlines, which called off merger talks with United Airlines in April said last month it would ask the US Department of Transportation to allow it to join United in the Star Alliance system. The alliance includes Germany's Lufthansa, Air Canada and other carriers.

Delta and Northwest, which announced a plan to merge earlier this year, won US antitrust immunity for a transatlantic joint venture with Air France-KLM.

(Reuters)