BA shares surge on AA ruling

SHARES in British Airways yesterday surged after the lucrative tie-up between the struggling carrier and potential partner American Airlines moved a step closer.

The US Department of Transportation (DoT) proposed granting the Oneworld alliance immunity from anti-trust competition laws. It says the move would enhance competition within the airline industry where the SkyTeam alliance and Star Alliance are already benefitting from closer co-ordination of their international operations after being granted immunity from anti-trust laws.

The oneworld alliance would allow AA, BA and partners Iberia, Finnair and Royal Jordanian Airways to cross-sell and share revenue. In theory this means lower fares on more routes, increased services, better schedules and reduced travel and connection times for passengers – and could help to turn around the fortunes of embattled BA which is struggling under a huge pension deficit and looming strike action. It is on track to report record losses this year.

In return, the DoT will require BA and AA giving up four take-off and landing slots at Heathrow – much lower than the 16 pairs of slots specified by the regulator last time the airlines were looking to join forces.

The decision would give BA and AA more than 47 per cent of the market between the US and UK.

Sir Richard Branson, who founded BA rival Virgin Atlantic, has slammed the decision.
labelling it a “kick in the teeth” for competition.

Other airlines now have 45 days to respond to the DoT ruling.