BA and American Airlines abandon alliance plans

Sunday, 28 Jan, 2002 0

British Airways and American Airlines have said that the conditions imposed by the US Department of Transportation for its proposed alliance are “too high.”

The US DOT said that the airlines would have to divest 224 take-off and landing slots at Heathrow before the deal would get the go-ahead. Its tough stance towards the two carriers means that the Open Skies talks between the UK and US governments – which were supposed to start in Washington today – have been cancelled.

The Open Skies talks were aimed at opening up London Heathrow to more US carriers. The UK government has pulled out because approval for the AA/BA alliance was a condition for the talks going ahead.

In a joint statement Rod Eddington, British Airways’ Chief Executive (pictured) and Don Carty, Chairman and Chief Executive, American Airlines, said: “We will not do this deal at this price. We made it clear from the start that we would not conclude the deal if the regulatory price was too high. Regrettably this has proved to be the case.

“It is a disappointment for both airlines, shareholders, and for the many staff who have worked extremely hard to ensure that the deal would be a real success for the flying public.

“The conditions laid down by the US government do not make sense for either company. We will not acquiesce to unrealistic, and in our view, unnecessary demands. For us, the price is just not right.”

They added: “We simply sought to have the same commercial advantages and deliver the same consumer benefits that rival airline alliances and their passengers already enjoy. Consumers will now be denied the substantial range of benefits that would have arisen from a closer alliance between our two great airlines.”

Both airlines pledged to continue to develop the bilateral relationships within the oneworld alliance and said they will “endeavour to deliver as much of the customer proposition as they can within the existing legal boundaries.”

See our previous stories:

20 Dec 2001: Continental says BA/AA alliance would stifle competition
18 Dec 2001: Competition concerns put BA /AA deal in jeopardy
07 Nov 2001:Branson slams BA/AA alliance
14 Aug 2001:American and BA say tie-up justified in new era
06 Aug 2001:Branson vows to fight “tooth and nail” against BA/AA alliance
03 Aug 2001:British Airways and American Airlines renew alliance bid