Bruce Barnard | Oct 02, 2009 10:44AM EDT
A planned trans-Atlantic alliance between American Airlines, British Airways and Spain's Iberia may violate anti-trust rules, European Union competition regulators said Oct. 2.
The European Commision, the EU's executive arm, sent a so-called statement of objections to the three carriers outlining its concerns and inviting remedies.
The commission said the alliance "may be in breach of European rules on restrictive business practices."
The carriers are seeking anti-trust immunity to jointly manage schedules, capacity and pricing as well as share revenue on routes between Europe and the United States, Canada and Mexico.
The airlines are also seeking anti-trust clearance from the U.S. Department of Transportation which is expected to rule by Oct. 31.
This is the third time BA and American Airlines have sought approval for a trans-Atlantic alliance. They withdrew previous applications in 1997 and 2002 after regulators demanded they give up a large number of landing slots at London Heathrow airport.
The carriers are expected to argue that the "open skies" accord between the United States and the EU in 2008 lifted the restrictions on rival airlines getting slots at Heathrow, the world's busiest international hub.
Despite the EU's objections, the airlines are confident of getting approval from Brussels as the U.S. DOT has waved through other trans-Atlantic alliances including the Star Alliance led by Lufthansa and United Airlines and the SkyTeam alliance headed by Air France-KLM and Delta Airlines.
Separately, BA chief executive Willie Walsh said the carrier could wrap up a planned merger with Iberia before the end of the year.
Walsh said the talks, which began in July 2008, are making progress but he insisted BA would not accept a stake of less than 53 percent of a merged carrier.
The merged carrier would have a one million tons-a-year cargo business based on 2008 traffic, third among Europe's scheduled airlines after Air France-KLM and Lufthansa.
Contact Bruce Barnard at brucebarnard47@hotmail.com.