AMR Nears British Airways Alliance as EU Backs Deal

AMR Corp.’s American Airlines moved a step closer to completing a trans-Atlantic alliance with British Airways Plc that will control almost 50 percent of flights at London’s Heathrow Airport.

The American-British Airways plan won European Union antitrust approval today and awaits clearance from the U.S. Transportation Department. The venture would give the carriers equal footing with other alliances that coordinate pricing, flights and marketing across the Atlantic.

“This is very, very important for the way BA and AMR operate and gives them some significant advantages, which competitors such as Air France and Lufthansa have already been benefiting from,” said Gert Zonneveld, an analyst at Panmure Gordon in London who rates British Airways as “hold.”

British Airways and American agreed to give up 10 flight slots in the U.K. and U.S., said the European Commission, the EU’s regulatory agency. The panel also approved a $6.6 billion merger of British Airways and Spain’s Iberia Lineas Aereas de Espana SA, which is included in the antitrust authority.

U.S. regulators granted tentative approval for the antitrust alliance in February. Transportation Department officials said then that the airlines had to yield four pairs of takeoff and landing slots to rivals at Heathrow, Europe’s busiest airport.

Autumn Start

“We await the DOT’s final decision, but welcome this important and vital step,” Willie Walsh, British Airways chief executive officer, said in a statement.

Bill Mosley, a Transportation Department spokesman, declined to comment.

British Airways and American Airlines aim to start their venture this autumn, the U.K. carrier said. The alliance “will result in more competition in the trans-Atlantic market,” AMR CEO Gerard Arpey said in a statement.

AMR fell 3 cents to $7.10 at 3:33 p.m. in New York Stock Exchange composite trading. British Airways gained 0.4 percent to 207.9 pence in London.

The alliance plan, submitted in 2008, is the third attempt since 1996 to forge closer ties between British Airways and Fort Worth, Texas-based American, which are leading members of the Oneworld group of carriers and jointly market dozens of routes.

The EU “has let consumers down by agreeing to paltry remedies which are wholly inadequate,” said Richard Branson, founder of Virgin Atlantic Airways Ltd., British Airways’ largest long-haul rival at Heathrow.

“We have fought this monster monopoly for the past 13 years and are still resolute in our belief that this decision is shameful and that consumers will suffer greatly as a result of this deal,” Branson said in a statement.

The opening of Heathrow to competitors, the granting of antitrust immunity to other alliances and the concessions agreed to by American and British Airways cleared the way for approval, said Alan Bender, professor of airline economics at Embry-Riddle Aeronautical University in Daytona Beach, Florida.

“When you add all those things together, it’s just pretty obvious that finally they’d have to go along with this,” he said of regulators. “It’s extremely important, and I can’t think of another case where something has taken this long to happen.”

American and London-based British Airways dropped their last alliance effort in 2002 over U.S. requirements for the number of Heathrow flights to be ceded.

To contact the reporters on this story: Stephanie Bodoni in Brussels via sbodoni@bloomberg.net; Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

British Airways and American Airlines aim to start their venture this autumn, the U.K. carrier said. The alliance “will result in more competition in the trans-Atlantic market,” AMR CEO Gerard Arpey said in a statement. Photographer: Tomohiro Ohsumi/Bloomberg