British Airways Plc rose as much as 5.9 percent in London trading after winning antitrust approval for an alliance with AMR Corp.’s American Airlines that will boost earnings from the world’s most lucrative travel market.

British Airways advanced 11.5 pence to 207 pence after the U.S. Transportation Department gave the go-ahead Feb. 13 for the carrier and its Fort Worth, Texas-based partner to jointly price, market and schedule flights across the North Atlantic.
BA and American won immunity for the pact, which includes Spain’s Iberia Lineas Aereas de Espana SA, following the failure of requests in 1997 and 2001. The pair must yield four pairs of operating slots at London Heathrow airport, compared with the 16 prescribed by the DOT before the last proposal fell through.
“The North Atlantic business is very, very important, not just the routes but the premium element as well,” said Gert Zonneveld, a transport analyst at Panmure Gordon in London. “The slot requirement seems far less onerous than last time round, though for an airline even one slot is too many.”
British Airways was trading up 4.3 percent at 203.8 pence as of 09:02 A.M. in London, where it is based, valuing the company at 2.35 billion pounds ($3.68 billion).
Madrid-based Iberia, with which the UK carrier aims to merge, added 6.7 percent and was later priced up 4.2 percent at 2.17 euros.
A major hurdle to approval of the pact was removed when the signing of an “Open Skies” treaty between the European Union and U.S. ended a four-carrier monopoly on flights to Heathrow, Europe’s busiest airport. The Transportation Department’s decision may become final after a 60-day comment period.
The verdict “beggars belief,” Richard Branson, the billionaire president of Virgin Atlantic Airways Ltd., BA’s biggest competitor at Heathrow, said in a statement.
“Four slots pairs is a complete joke, and those responsible for this decision should hang their heads in shame.”
Susan Kurland, the DOT’s assistant secretary for aviation and international affairs, said of the proposed alliance that the “potential benefits outweigh the potential harm,” with the pact likely to provide a “wide range of valuable benefits, including lower fares.”
British Airways, Europe’s third-biggest carrier, and American Airlines, the second-biggest in the U.S., are already partners in the Oneworld grouping. Finnair Oyj and Royal Jordanian Airlines are also part of the alliance plan, which is still being evaluated by the European Union.
Airlines use each others’ routes to expand networks and compete with other large alliances. Oneworld is the third-largest global airline alliance behind Star and SkyTeam.
The U.S. Justice Department advised the transportation agency in December that the American Airlines-BA alliance should gain antitrust immunity only if some takeoff and landing slots are surrendered or routes exempted from the partnership.
The Transportation Department in July approved antitrust immunity for Continental Airlines Inc. to coordinate flights abroad with United and eight other carriers as part of the Star Alliance, the world’s largest airline group.
Northwest Airlines Corp. and Delta Air Lines Inc., before they merged in 2008, also received antitrust immunity to collaborate with Air France-KLM, Italy’s Alitalia SpA and Ceske Aerolinie AS in SkyTeam, the second-largest alliance.
(Source: Bloomberg)