Could it be that even as it engaged in merger talks with United last week, Continental Airlines secretly knew all along it would jilt her in a heartbeat for a run behind the barn with British Airways? Naughty, naughty. That said, BA’s hardly complaining. Take a look at what it’s doing to the air carrier’s shares today. Even so, with all the chest-beating antitrust evangelists running amok, what are the chances a rendezvous between these two might actually result in a long-term relationship?
British Airways shares gained 8.5p to 235p in early trading today following confirmation that the carrier is in talks to forge alliances with Continental Airlines and oneworld partner, American Airlines.
If the carriers successfully applied for immunity from antitrust regulators, they would be able to liaise more closely over fares and frequent-flyer programmes and to coordinate their schedules. The trio may also push for a joint purchasing agreement, which would allow them to gain economies of scale by bulk buying jet fuel, catering and parts.
However, discussions are not thought to include any plans for a merger at this time because foreign ownership rules of US airlines would prevent such a move.
BA and American Airlines have sought antitrust immunity twice, in 1997 and 2001, but were hindered by regulators that would approve their application only if the two airlines disposed of some of their valuable landing slots at Heathrow.
In a brief statement yesterday, BA said: “British Airways is exploring opportunities for cooperation with American Airlines and Continental Airlines.” A spokeswoman refused to provide further details.
Any attempt to merge the operations of the three airlines will prompt outrage from rivals, who fear that a BA-AA-Continental alliance would dominate the lucrative transatlantic route. Sir Richard Branson, president of Virgin Atlantic, has already fought off previous attempts by BA and AA to merge and he reacted angrily to their latest attempt to join forces.
He said: "A link-up between BA and AA is still anti-competitive and now they have the cheek of trying to add Continental to the mix too. This triple whammy would reduce effective competition across the Atlantic and the regulators should make it absolutely clear that it would have no chance of getting off the starting grid. This combination would act against the interests of passengers and Virgin Atlantic will fight tooth and nail to ensure that regulators say no way BA/AA/Continental."
Continue reading on TimesOnline