SHARES in British Airways took off after US regulators put forward less stringent conditions than expected for its tie-up with American Airlines.
The two airlines and their “oneworld” alliance partners Iberia, Finnair and Royal Jordanian Airlines will only have to give up four pairs of prized take-off and landing slots at Heathrow under a draft ruling from the US Department of Transportation.
BA has been dogged by industrial disputes, winter weather – as well as sharing in the difficult conditions faced by the aviation sector as a whole in recent months.
But markets welcomed the move yesterday as shares rose by 3% – or 5.1p – to 200.6p..
The strengthening of the alliance will see the airlines jointly market routes, co-ordinate schedules as well as cut down on costs and connection times.
The tie-up still requires final approval from the Department ot Transportation and clearance from the European Commission.
The airlines will work together on routes between USA, Canada and Mexico and the European Union, Switzerland and Norway while continuing to operate as separate entities.
The move enraged BA’s bitter transatlantic rival Virgin, which called on European regulators to block the deal. Virgin called the DoT decision “a real kick in the teeth for consumers”.
While the alliance partners must make four pairs of Heathrow slots – each worth about £20m – available to competition, it represents a fraction of the 130 transatlantic slots currently controlled by BA and AA.
This is the third time that BA has applied for anti-trust immunity for an alliance with AA after previous tie-up attempts in 1997 and 2001 foundered.
Panmure Gordon analyst Gert Zonneveld said: “This is clearly very significant for BA.
“It’s a major market for them and the ability of the alliance to effectively operate as one player is a major advantage.”
The DoT said the proposed alliance would enhance competition by giving a new rival to the existing Star Alliance and the SkyTeam tie-up, which have already been granted immunity.
Opponents have 60 days to voice their objections to the DoT’s draft ruling.