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American in Talks to Move Partners to JFK Terminal

American Airlines is in advanced talks to bring alliance partners British Airways Plc and Iberia Lineas Aereas de Espana SA into an overhauled terminal at New York’s Kennedy airport to bolster overseas flights.

“It will require expansion and will be significant in terms of investment,” Art Torno, vice president overseeing American’s New York operations, said in an interview. “When we finish that terminal, it will be a watermark for everyone to shoot for.”

Putting the Oneworld alliance members under one roof would help AMR Corp.’s American counter Delta Air Lines Inc., which unveiled plans yesterday for a $1.2 billion renovation at John F. Kennedy International Airport. Alliances enable carriers to sell seats on each other’s jets.

“The more American can concentrate its partners in its Terminal 8, the better the connections are going to be,” said James Higgins, an analyst at New York-based Soleil Securities Corp. with a hold rating on AMR. “It’s a real convenience factor.”

The cost and scope of the plan remain under discussion with British Airways, Spain’s Iberia and the Port Authority of New York and New Jersey, which oversees JFK, Torno said yesterday.

Any investment would be in addition to the $1.3 billion that Fort Worth, Texas-based American spent on a terminal renovation completed in 2007, he said. The 1-million-square-foot facility is American’s primary international gateway in the eastern U.S. It has 36 gates.

‘Competitive Response’

“New York is really a battle for market share,” Torno said. “I don’t think anyone can own New York. Our reaction is a competitive response to protect our interests here in the world’s largest aviation market.”

American, British Airways and Iberia couldn’t begin talks on a single terminal until after July 20, when they won final U.S. approval to jointly set prices, sell tickets and schedule trans-Atlantic flights. That venture doesn’t cover other Oneworld members, which include Japan Airlines Corp.

An Iberia spokeswoman in Madrid declined comment on the discussions. Michelle Kropf, a British Airways spokeswoman in New York, didn’t immediately return calls.

Jennifer Friedberg, a port authority spokeswoman, declined to comment specifically on the three airlines while saying the agency was “always in discussions” about facilities improvements.

‘Big and Powerful’

“Placing BA’s huge London Heathrow presence under the American Airlines banner is a big and powerful move,” said Jay Sorensen, president of airline consultant Ideaworks in Shorewood, Wisconsin.

American is adding 15 new destinations from New York this year and 33 flights. It will announce more schedule changes involving its alliance partners for the summer of 2011, Torno said. The carrier implemented a partnership last month with JetBlue Airways Corp. to feed international passengers onto JetBlue flights at Kennedy to 18 domestic markets.

Delta and American ranked second and third in passengers at Kennedy in the 12 months ended in May, trailing JetBlue, according to the U.S. Bureau of Transportation Statistics.

Continental Airlines Inc., which operates a hub at Newark Liberty International Airport in New Jersey, leads the New York market in passengers, according to BTS data. American and Delta split their New York operations, with global service at JFK and domestic flights at LaGuardia.

LaGuardia Investment

American also is investing about $30 million to remodel LaGuardia’s C and D concourses. The carrier is considering whether to connect the two terminals or build an additional Admirals Club lounge, Torno said.

Delta will renovate Kennedy’s Terminal 4, which is used by foreign carriers, and link it with Terminal 2, where the Atlanta-based airline has flights. The 1960s-era Terminal 3, formerly used by Pan American World Airways, will be demolished to make room for parking jets. Delta will begin work next month and finish by mid-2013.

AMR added 3 cents to $6.85 at 4:15 p.m. in New York Stock Exchange composite trading, while Delta rose 12 cents to $11.48.

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

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