American Airlines signs partnership deal with British Airways and Iberia

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American Airlines Inc. has signed an agreement to strengthen its business partnership with British Airways and Spain’s Iberia airline under the oneworld international travel program. The agreement, which still requires the approvals of the U.S. Department of Transportation and European Union regulators, would expand the three airlines' relationship, allowing them to jointly share revenue and make decisions about marketing, flight schedules and other business-related issues without encountering antitrust issues.

Tim Smith, a spokesperson for American, says the proposed agreement would essentially “allow us to do things that we could not otherwise do without antitrust immunity.”

The proposed revenue sharing agreement stipulates that Fort Worth-based AMR Corp. (NYSE: AMR), the parent company of American Airlines, will cooperate with Spain-based Iberia and British Airways on commercial flights between the U.S., Mexico, Canada, the European Union, Switzerland and Norway. Despite the global partnership, which is expected to create a network of 443 possible destinations in 106 counties with 6,300 daily departure options, the three companies will continue to operate as separate business entities.

“We believe our proposed cooperation is an important step toward ensuring that we can compete effectively with rival alliance and manage through the challenges of record fuel prices and growing economic concerns,” said Gerard Arpey, chairman and CEO of American Airlines “In addition, we believe we will be more effective competitors with greater ability to invest in our produces and services.”

The president of Virgin Atlantic airlines Sir Richard Branson has written letters to U.S. Presidential candidates John McCain and Barack Obama warning them about the proposed alliance’s potential to stifle competition on “major transatlantic routes.”

Branson believes customers will inevitably pay the price for the combined carriers ending up with nearly half of all takeoff and landing slots at London’s Heathrow airport, the airline executive said in a statement.

Branson told the presidential candidates that “airlines everywhere are struggling with the current price of oil, but the solution to their problems should not lie in an anti-competitive agreement which will inevitably lead to less competition and higher fares.”

He also brought up previous attempts by American and British Airways to work in-sync internationally. Branson says “every regulator that examined the alliance raised serious concerns about the anti-competitive nature of the proposal.”

American pointed out in a press statement Thursday that two other similar alliances between airlines have received antitrust immunity: the SkyTeam Alliance, which includes six international airlines; and the Star Alliance, which is made up of nine separate carriers.