Finally, a ray of light for British Airways chief exec Willie Walsh: European competition authorities have given the go-ahead for an alliance between BA, Spanish airline Iberia and American Airlines. The three companies are planning to join forces to pool their transatlantic routes and share revenues, ticketing and flight schedules, which they say will help them make dramatic cuts in their expenditure.

It’s great for BA, meaning the struggling airline might finally be able to start rebuilding its reputation after a summer of wrangles with cabin crew. But Virgin Atlantic president Richard Branson is on the warpath...

BA, which saw revenues drop by £1bn in May after a year of bad weather, strikes, and that pesky volcano, stands to make significant savings from the deals. By stripping out duplicate costs, the airline will save £230m a year on the deal with AA, and another £330m a year from Iberia. In fact, the airline reckons IT savings alone will add up to £56m a year within five years, while maintenance costs will drop by £46m a year and purchasing overheads will fall by £22m a year.

The tie-up follows a recent pattern in the airline industry. With falling demand and higher fuel costs, reams of airlines have rushed to join forces and create their own alliances. BA says the new ‘Oneworld’ group the three airlines will form will help them to ‘better compete with rival groups’ Star, which includes the likes of United, Lufthansa, Continental, Air Canada, BMI; and Sky Team, which includes Delta, Air France, Alitalia, Aeroflot.

But the tie-up hasn’t come cheap to the airlines involved: part of the deal with the competition authorities means the airlines will have to give up four lucrative pairs of landing and take-off slots between either Heathrow or Gatwick and Boston, Dallas and Miami. And that’s not all: three more pairs of slots between London and New York’s JFK airport will be under review. If services between the two ends drop below current levels, the slots will be reassigned.

And let’s not forget the fact that all the airlines could be put in an awkward situation when it comes to negotiating wage deals for staff. Pilots’ union Balpa has already warned against attempting to play groups off against each other.

Rival airline Virgin is, naturally, pretty upset. Beardy Virgin founder Richard Branson says he’s ‘fiercely’ opposed to the deal, adding that the new alliance will give BA a ‘stranglehold’ on the most profitable routes between the US and Heathrow airport, allowing it to push up fares. Branson added that the decision will create a ‘massively uneven playing field’. BA, though, argues that with six large airlines all competing for the same slots at Heathrow, there’s no way it will be able to push fares to unreasonable levels.

Still, with cabin crew beginning to calm down and the future, for now at least, looking a shade or two brighter, this could well be the beginning of a new chapter for beleaguered BA. Let’s just hope there are no more volcanoes to throw a spanner in the works, eh?

In today's bulletin:

BA, Iberia and AA tie-up earns its wings
Whither Ocado as Fairfield fails to float
Workshy Brits throw 35m sickies a year
Apple drops the call
Not such a jolly holiday for cash-strapped Brits

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