American airlines, British Airways and Iberia last week revealed they had finalized their routes merger deal. The three airlines unveiled the new routes, pledging to offer their passengers quality services and flight flexibility. The deal was an $8 billion transatlantic joint business and was appended last week. The merger and the unveiling of the new routes are aimed at reinforcing the three airlines’ already existing oneworld alliance.
However, the three airlines can’t go on a financial merger, even though the deal is so close to one, because of US laws that forbid ownership in the airline industry. The move is as well aimed at enabling the firms realize growth in profits, as most airline firms’ struggle to stay on course amidst the effects of the global financial crisis.
In the merger plans, the three companies announced four new flight routes and codeshares on over 2,600 additional flights as part of the new deal that is geared at taking a chunk of business from the larger Star alliance. With the announcement of the deal, American Airlines said it was recalling about 250 furloughed pilots and 550 flight attendants as a sign of confidence in the deal.
AMR Corp chief executive Gerard Arpey said a recent comeback in business traffic and growing signs that the US would avoid a double dip recession were both encouraging. However he as well sounded a note of caution over the economic recovery. AMR Corp is American Airlines parent company. He further added that AA was keen on such growth strategies as this deal, and the continuation of such merger trends is welcome even as recovery from the recession remains frail.
Mr. Arpey was speaking during the launch of the new deal over routes in London. From the terms of the deal, the three firms’ passengers will be able to purchase tickets for a route network that serves over 400 destinations in 105 countries on each of the carriers’ websites. As such, customers will be able to mix and match flights between the three carriers for the first time ever.
This deal comes in the wake of an earlier deal between British Airways and Iberia this year. The merger between the UK’s BA and Spain’s Iberia created the third largest airline in Europe. The move got competitors in the industry such as Virgin Atlantic Airways angry, given their continued complaints against BA’s dominance at Heathrow Airport.