EU Clears BA-Iberia Merger, American Alliance

EU Clears BA-Iberia Merger, American Alliance

European Union regulators July 14 cleared plans by British Airways, American Airlines and Iberia to form a powerful trans-Atlantic passenger and cargo alliance.

The European Commission, the EU's executive, simultaneously cleared a merger between BA and Spain's Iberia that will create Europe's third largest scheduled cargo airline with annual traffic close to 1 million metric tons.

The Commission cleared the trans-Atlantic alliance after the three carriers pledged to give up seven daily take-off and landing slots: three on the London Heathrow-New York route, two on London-Boston and one each on the London-Dallas and London-Miami routes.

The airlines, which are partners in the oneworld global alliance, will share revenues and profits and co-ordinate capacity, routes, fares and sales on services between the U.S., Canada, Mexico, the 27-nation EU and Switzerland and Norway.

The EU rejected previous attempts by BA and American to form an alliance in 1997 and 2002.

The trans-Atlantic alliance still requires final approval from the U.S. Department of Transportation but BA chief executive Willie Walsh hailed the EU's decision as "an important and vital step forward."

The DOT granted tentative approval for the alliance in February and is unlikely to withhold final clearance as it has already given anti-trust immunity to the rival Star and SkyTeam alliances.

The European Commission said it has no anti-trust concerns over the BA-Iberia merger as the two carriers do not compete directly on many routes and face competition on those where they do -- mainly between London, Madrid and Barcelona.

The merged carrier, to be owned by a London-listed holding company International Airline Group, will have a fleet of 408 aircraft flying more than 58 million passengers a year to 200 destinations.

BA will own 55 percent of International Airline Group and Iberia the remaining 45 percent but the carriers will retain their own brands and operations to protect their international traffic rights.

-- Contact Bruce Barnard at brucebarnard47@hotmail.com.