British Airways is seeking to deepen its relationship with AMR Corp.'s American Airlines, according to new BA CEO Willie Walsh. A BA spokesperson today confirmed United Kingdom media reports quoting Walsh as saying that the two carriers--long-time marketing partners and co-founders of the Oneworld alliance--would pursue additional cooperation in pricing, scheduling and codeshare flights. According to reports printed over the weekend by The Observer and BBC Online, Walsh also did not rule out the possibility of an eventual merger.
Any additional integration between the two carriers likely would be predicated on a new liberalized air transport agreement between the United States and the European Union, a development stalled for years by strong agendas on both sides
(BTN, Sept. 8, 2003). A new round of talks is scheduled for later this month.
Any new Open Skies agreement reached by regulators on both sides of the Atlantic likely would include changes at London's Heathrow Airport, where AA and BA are two of only four U.S. and U.K. carriers permitted to operate nonstop flights to and from U.S. gateways.
American and British Airways in early 2002 refused to surrender 224 weekly slots at Heathrow, a prerequisite set by the U.S. Department of Transportation for an immunized alliance between the two carriers
(BTNonline, Jan. 25, 2002). Should AA and BA again request antitrust immunity, or similar forms of cooperation, the issue of Heathrow would be front and center.
U.S. regulators, however, may ask for less-costly concessions the next time AA and BA request more flexibility, given the alliance agreements now in place between American's top U.S. competitors and their European partners, and the financial crisis gripping the domestic commercial aviation sector.
A cross-border merger--seen as extremely unlikely in the short term--would be even more complicated. "While it may be desirable for such a cross-border merger to occur, it is not going to happen without a change in U.S. and U.K. law," said Helane Becker, analyst with The Benchmark Co., noting the current 49 percent cap on foreign control over any U.S. airline. "As a result, this is a non-starter at this time."