EU Approves British Airways, American Airlines and Iberia Deal

Oneworld companies British Airways (BA), American Airlines and Iberia Wednesday reported the successful win of approval from the European Union antitrust clearance for a go ahead in their investment pact plans after the three airline companies agreed to give up certain lucrative transatlantic routes.

 

In the same breadth, the European Commission, the EU’s competition watchdog, approved BA’s planned merger with the Spanish company, Iberia. The three companies, also called Oneworld, plan to expand their investment agreements that target making better use of the “Open Skies” agreement struck between the US and the EU. The agreement liberalizes transatlantic aviation. In its decision, the EU ruled that the three carriers’ concessions, most of which are legally obligatory, are adequate to ease the competition anxiety, reiterating that it was as well ceding the investigations it had commenced in April, 2009.

 

Competition Commissioner, Joaquin Almunia, said in a statement that Wednesday’s decision will allow the three airlines form the transatlantic alliance, long overdue, whilst at the same time seeing to it that about 2.5 million passengers benefit too from a choice of frequencies and additional competitive prices.

 

With the EU’s announcement, BA shares went up by 0.3%, while Iberia’s stood at 0.6%, outdoing a 0.6% lower Stoxx 600 travel and leisure index. While receiving the announcement, BA welcomed the move by the EU reiterating that it was hopeful American legislators will issue a final decision on antitrust immunity in a few days time and subsequently, the airlines plan to commence their transatlantic joint business in autumn. AMR Corp, American Airlines parent company traded at a high of 1%, at $7.20 in the New York Stock Exchange Wednesday.  

AMR Chief Executive Officer, Gerard Arpey, said the company was only waiting for the US Department of Transportation’s decision on its proposal that is expected to institute additional competition in the transatlantic market, subsequently offering great public gains. Analysts had earlier expressed hope that the European Commission would approve the pact between the three airlines. The airlines had agreed to cede landing and take off allotments for some London and Dallas, Boston, Miami and New York.

 

The other concessions mentioned by the EU Commission include allowing access to their frequent flyer programs on the ceded routes and remitting data on their cooperation plans to the commission in a ten year period. Virgin Atlantic expressed its disapproval of the EU’s decision, saying the proposals do not address the resultant harm on competition from the three-way tie up.

 

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