BA seeks alliance with US airlines

British Airways has confirmed that it is looking at forging an alliance with two rival US airlines.

A statement issued by the airline last night (April 30) read: "British Airways is exploring opportunities for cooperation with American Airlines and Continental Airlines."

While the precise nature of such an alliance has yet to be disclosed, analysts say it would most likely hinge on synchronising fare and frequent-flyer policies as well as coordinating schedules.

A direct merger is considered unlikely given the tough regulatory environment, particularly regarding foreign ownership rules of American carriers.

US airlines have stepped up efforts to form new alliances in recent weeks following the merger between Delta and Northwest, which will create the world's largest airline.

When it was announced last month, analysts predicted the union would usher in a wave on consolidation.

Commenting on the report, American Airlines spokesman Roger Frizzell said: "We are confirming British Airways' statement today that it is exploring opportunities for cooperation with American Airlines and Continental Airlines."

CNN quoted Continental spokesperson Julie King as saying she was aware of the report but had no comment.

However, one unnamed source told The Telegraph: "This is all about BA and AA (American Airlines) merging. They have tried to do it before and failed because of anti-trust issues. What we are now seeing is this plan resurrected."

BA already has close ties to American Airlines through the oneworld global alliance.

Over the weekend, Continental dismissed reports that it was looking to merge its fleet and workforce with other US airlines in response to the Delta / Northwest merger.

The carrier had acknowledged that it wanted to pursue closer cooperation with American Airlines, but the prospect of a three-way alliance appears to have taken many analysts by surprise.

While such a deal would still require regulatory approval, the Open Skies agreement that came into effect in March has liberalised transatlantic travel and is expected to make it harder for regulators to block alliances.

In 2001, BA and American Airlines abandoned efforts to forge closer ties after they were told any such cooperation would necessitate surrendering a number of key takeoff and landing slots at London Heathrow.

Sir Richard Branson, president of Virgin Atlantic, responded to the latest report by stating that his company would "fight tooth and nail to ensure that regulators say no" to a three-way alliance.

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