BA’s tie-up with AA and Iberia is ready for take-off

BRITISH Airways (BA) will officially launch its new joint business with American Airlines (AA) and Iberia next month in a move that is expected to generate $7bn (£4.4bn) in combined revenue a year.

The deal, which was given the green light by EU and US competition regulators in July, will generate annual savings of up to £230m, analysts forecast.

As part of the agreement, which was officially signed yesterday, BA, Iberia and AA will share commercial flights between the EU, Switzerland, Norway and the United States, Canada and Mexico.

BA said the joint business would give customers “greater access to discounted fares”. “The benefits from the joint business will be shared between the airlines irrespective of which carrier takes the booking,” added BA.

Under the joint venture agreement, all three airlines will maintain and operate separate brands.

The tie-up has received heavy criticism from rival Virgin Atlantic, which argued that the move would cause a “monster monopoly”.

Meanwhile, BA and Iberia are on course to complete their £5bn full-blown merger and expect to gain shareholder approval at meetings to be held in November. The airline industry has been going through a period of rapid consolidation.