BA signs agreement with AA and Iberia

By John Bowker and Kyle Peterson

LONDON/CHICAGO (Reuters) - British Airways, AMR's American Airlines and Spain's Iberia said on Thursday they have agreed to a transatlantic tie-up designed to make the partners more competitive in an increasingly global air travel market.

The trio said it would file for antitrust immunity from the U.S. Transportation Department later in the day and also planned to notify EU regulators.

American, BA and Iberia intend to cooperate commercially on flights between the United States, Mexico and Canada and the European Union, Norway and Switzerland.

BA Chief Executive Willie Walsh told reporters the agreement includes deals on revenue sharing, as well as pricing and schedule co-ordination. He said he is confident of approval.

"I firmly believe that the regulators will approve our application for antitrust immunity," he told a conference call, adding that the U.S./EU "Open Skies" agreement earlier in the year would help their bid.

"Open Skies" allows airlines to access any U.S. city from any point in the European Union and vice versa, meaning previously restricted airlines can now access Heathrow airport. BA and American had an application for antitrust immunity rejected in 2001 due to a shared dominance of the London airport.

"We are applying in a world very different from the world when we last applied in 2001," Walsh said, adding that immunity would allow the airline to compete more effectively with other transatlantic alliances already granted immunity.

Among these are the Star Alliance, which includes Germany's Lufthansa and U.S.-based UAL's United Airlines; and SkyTeam, which includes BA rival Air France-KLM and U.S.-based Delta Air Lines.