In a much-anticipated agreement, American Airlines said it will team up with British Airways and Spanish carrier Iberia to cooperate on flights across the Atlantic.
The three airlines have signed a joint deal that includes an application for antitrust immunity on transatlantic flights. If granted, the immunity would allow them to coordinate schedules, operations, marketing and other functions in an unprecedented fashion.
The airlines said the agreement will give customers more destinations, easier connections and easy integration of frequent-flier plans.
The antitrust application will also include Finnair and Royal Jordanian airlines.
The airlines are already members of the Oneworld global airline alliance. But the new agreement, while not a merger, further strengthens ties among the carriers.
The airlines' combined networks will serve 443 destinations in 106 countries, with 6,300 daily departures.
Gerard Arpey, American's chief executive, said the deal would be an "important step" toward a financial recovery. The Fort Worth-based carrier has been shuddering under record fuel prices, and has lost more than $1 billion during the first half of the year.
"There's no silver bullet in this economic climate, but this is one important piece of the puzzle of putting us on a solid financial footing," Arpey said.
It's unclear how long it will take the transportation department to make a decision on the application. Arpey said he was hopeful that regulators will move quickly.
"There is no reason why this can't be dealt with expeditiously," he said.
Willie Walsh, chief executive of British Airways, said in a prepared statement that "this strategic relationship strengthens competition by providing consumers with easier journeys to more destinations with better-aligned schedules and frequencies."
The deal quickly came under fire from Richard Branson, president of U.K. carrier Virgin Atlantic, who said it will mean higher fares for travelers.
"If this monster monopoly is approved it will be third time unlucky for consumers," he said. "It will still be bad for passengers, bad for competition and bad for the U.K. and U.S. aviation industry."
The airlines' ultimate goal is to boost revenues while cutting expenses. Several rival carriers, including Northwest, Delta, Air France and KLM, already have anti-trust immunity for flights between the United States and Europe.
But the union representing American's pilots expressed some concerns about the proposal.
"Today's announcement is problematic on several fronts," said Lloyd Hill, an American pilot and president of the Allied Pilots Association, in a statement. He suggested that an alliance could conflict with provisions in the union's contract.
"Management therefore needs (the union's) consent before this joint business agreement can go forward," he said.
American officials disputed the claim.
"The agreement complies with all aspects of our labor contracts," said American spokeswoman Sue Gordon. She noted that the airlines "will maintain separate work groups without any integration of employees."