BA, Iberia and AA alliance takes flight

More good news for BA, as Willie Walsh finally signs off a transatlantic revenue-sharing deal with American Airlines.

by Emma Haslett
Last Updated: 07 Apr 2011
British Airways/ Iberia said this morning that they’ve finally signed a revenue-sharing deal with American Airlines. The deal, estimated to be worth about $7bn (£4.4bn) means the three airlines will share passengers and costs on routes between Mexico, Canada and the US; and most European countries. It will, at the very least, put the airlines on an even keel with competing alliances. All it has to do now is grow, fast – so as well as dealing with his recalcitrant cabin crew, BA boss Willie Walsh needs to focus on finding some more partners…

For Walsh, who, let’s face it, hasn’t had the best of years, it’s another bit of good news, after BA’s merger with Iberia was approved last week. The deal will mean that a share of the revenue from transatlantic flights booked with any of the three carriers will go to the other two; that will at least go some way to easing the pressure on cash-strapped BA, whose results in the three months to the end of July showed a loss of £72m.  

The deal will come as a blow to Virgin, which has been campaigning hard against the tie-up, calling it a ‘monster monopoly’. Oneworld’s other most significant competitors will be Star Alliance, whose members include Lufthansa and bmi, and SkyTeam, which includes AirFrance and Delta. Given the size of its competitors, Oneworld still has some growing to do. Still, it does have one advantage in the form of regulatory approval from both US and European competition authorities. Both Star and SkyTeam have been operating without approval from Brussels, which says it’s ‘examining’ the deals. We shall see.

Walsh’s next job will be to find more airlines to join the alliance. He’s always said consolidation is the future of the airline industry; but persuading new airlines to join Oneworld may be easier said than done, especially given that many governments are disinclined to hand over control of their big airlines. Still, that hasn’t stopped him from making a list of 12 carriers he’d like to tie up with in the near future, rumoured to include Finnair and Qantas. But Qantas is a case in point: BA failed to merge with it a few years ago, thanks to the Aussie government, which put a stop to the deal. So it’ll be easier said than done.

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