BA, American and Iberia close to joint venture

British Airways, American Airlines and Spain's Iberia are close to applying for antitrust immunity to form a transatlantic joint venture, the Financial Times reported yesterday.

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

BA said in April it was in discussions with both American Airlines and rival US carrier Continental Airlines, which a source briefed on the matter said at the time was about a potential alliance.

"BA has been in talks with American Airlines for some time, but no decisions have been reached. Anything else printed is speculation" a BA spokesman said yesterday.

American and BA have tried and failed to gain antitrust immunity twice before, but are now likely to argue a case with US regulators that the competitive landscape has been changed by the "open skies" agreement.

The agreement between the US and the EU came into force in March, allowing airlines to access any US city from any point in the EU and vice versa.

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 pair have struggled to gain immunity themselves because of their dominance at London's Heathrow.

But BA rival Virgin Atlantic said a deal between BA, AA and Iberia would still be anti-competitive. "It would form a dominant mega-power on transatlantic air routes from two of the largest EU members, forcing up ticket prices for passengers a spokesman said.