Apply For Antitrust Immunity; APA Expresses Doubts

It's official. On Thursday, American Airlines announced it has signed a joint business agreement with British Airways and Iberia on flights between North America and Europe.

The companies later filed for worldwide trust immunity with the US Department of Transportation, and declared their intent to include fellow "oneworld" alliance members Finnair and Royal Jordanian in the immunity agreement. Similar filings with regulatory authorities in the European Union are planned.

"Today's announcement is a significant step towards strengthening customer choice," American Airlines stated. "This agreement will enable oneworld to compete effectively with rival global air alliances that have already received transatlantic antitrust immunity. Currently, six airlines in SkyTeam and nine Star Alliance airlines have such immunity."

Gerard Arpey, Chairman and CEO of American parent company AMR, added "We believe our proposed cooperation is an important step towards ensuring that we can compete effectively with rival alliances and manage through the challenges of record fuel prices and growing economic concerns. In addition, we believe we will be more effective competitors with greater ability to invest in our products and services. As a result, this business agreement will create positive outcomes for our customers, shareholders, employees and the communities we serve."

British Airways CEO Willie Walsh cited the recent "Open Skies" agreement as his reason for opting for the alliance. "We are applying for EU-US antitrust immunity in a changed regulatory world where London Heathrow is open to any US or EU airline that wants to fly to the United States and where rival alliances have immunity," he said.

Not everyone welcomed news of the proposed alliance, however. The Allied Pilots Association, which represents 12,000 pilots at American Airlines, termed the news "problematic on several fronts."

"The scope clause in our current collective bargaining agreement does not include an exception for a joint business agreement between American Airlines and another airline," said APA President Captain Lloyd Hill. "Management therefore needs APA's consent before this joint business agreement can go forward."

Hill then pointed out his union's current struggle to negotiate a new contract with American. "Today's announcement illustrates that American Airlines management can negotiate complex agreements on a timely basis when they want to do so," Hill said. "It's indicative of management's misplaced priorities that they aren't willing to apply the same sense of urgency toward negotiating new collective bargaining agreements with their employees."

"That said, we understand clearly why the other carriers would want to link up with American Airlines. The US aviation market is the world's largest and most lucrative," he said. "And that's precisely why we have such serious concerns... Make no mistake, we want American Airlines to succeed, but that success cannot come at the expense of the employees."

FMI: www.aa.com, www.alliedpilots.org, www.britishairways.com, www.iberia.com, www.rj.com, www.finnair.com