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. Last Updated: 07/27/2016

Proposed Airline Partnership Hinges on U.S.-British Pact

NEW YORK -- A proposed partnership between AMR Corp.'s American Airlines and British Airways plc could create the largest and most potent global competitor in the air, but only if the United States and Britain reach an "open skies" free-trade aviation pact.


The planned pairing announced Tuesday could leapfrog competitors who have formed global alliances more quickly. But before they can effect their plans, the carriers need a grant of immunity from U.S. antitrust laws.


An open-skies agreement is a prerequisite to that green light.


Executives at each airline voiced optimism the deal would reignite stalled bilateral aviation talks, and Britain said Tuesday it would consider resuming negotiations.


The U.S. Department of Transportation on Wednesday reiterated its policy that antitrust immunity must be preceded by an open skies agreement.


Though the BA and American partnership could conceivably proceed piecemeal, company executives suggested the deal as currently envisioned is all but doomed unless all regulatory rulings go their way.


British Airways said the two airlines would coordinate operations of all of BA's 244 flights a week from Britain to its 22 U.S. destinations and all of American's 238 flights a week from seven U.S. airports to 12 European destinations.


They said they would remain separate entities, would not exchange equity stakes and would seek swift progress on the regulatory issues that would need to be cleared up before implementing the proposed alliance.


Because earlier open-skies talks ended dismally and U.S. access to London's Heathrow Airport has long been a sore point, analysts were guarded, even while rating the pact a potential winner.


The United States signed aviation agreements with about 30 countries last year. One with Germany cleared the way for the mammoth partnership between Lufthansa and United Airlines, for now the largest alliance.