BA-Iberia merger given green light by Europe

A merger between British Airways and Spain's Iberia national carrier was approved by the European Commission today.

The decision came at the end of an inquiry into whether the link-up - creating the world's third-largest airline - would breach EU rules on fair competition.

A Commission statement said: "The Commission's investigation confirmed that the merged entity will also continue to be subject to competition from a number of competitors on the markets for air cargo transport and ground handling services."

The decision comes as the Commission investigates what it called "extensive" levels of co-operation on transatlantic routes proposed between BA, Iberia and American Airlines - members of the "oneworld alliance".

The arrangements involve joint management of schedules, pricing and revenue-sharing which, Commission officials have warned, could breach EU rules on restrictive business practices.

The three airlines received a Statement of Objections last October.

Today the Commission finally gave the green light for the three-way accord, which now needs endorsement from the US Department of Transportation (DOT).

BA chief executive Willie Walsh commented: "We await the DOT's final decision but welcome this important and vital step forward. "The high number of new services on London to US routes since the Open Skies agreement demonstrates that Heathrow is open.

"Between us, we have agreed to make available Heathrow slot pairs for our competitors to use on services to the US. This is a pragmatic decision so that we can get the joint business up and running as soon as possible. The slot commitments provide a further guarantee that there will be no possible loss of competition as a result of our joint business".

BA says the joint venture will strengthen competition across the Atlantic by enabling the "oneworld alliance" to compete on a level playing field with the other global alliances that already have "anti-trust immunity" from the US Department of Transportation.

"Customers will benefit from easier, seamless and convenient travel to more global destinations with better connections, improved flight schedules, and enhanced frequent flyer benefits." said a statement.

The three airlines plan to launch the transatlantic joint business later this year.

Sir Richard Branson's airline, Virgin Atlantic, has been vehement in its opposition to the BA/Iberia tie-up with American Airlines (AA).

Sir Richard said today: "We have fought this monster monopoly for the past 13 years and are still resolute in our belief that this decision is shameful and consumers will suffer greatly as a result of this deal. The European Commission has let consumers down by agreeing to paltry remedies which are wholly inadequate.

"Luckily for the competition authorities, Virgin Atlantic will continue to compete to win passenger and corporate business despite this massively uneven playing field which we are forced to compete on."

Virgin said the final decision and remedies package remained "woefully inadequate".

The airline went on: "The many shortcomings include too few (take-off and landing) slot remedies, no requirement for competitors to take up the remedies which means BA/AA can proceed regardless of whether competition is in place and slots which are only available on a limited-duration lease-hold basis thereby disincentivising new entry.

"All of these factors combined mean that the remedies are unable to address the competitive harm caused by a combined BA/AA."

Pilots' union Balpa warned BA and Iberia managements that they should "not attempt to play one pilot community off against the other".

General secretary Jim McAuslan said: "Pilots in BA and Iberia have signed mutuality agreements which will stand them in good stead if managements try to take advantage and attack terms and conditions.

"The pilots have also had discussions with pilots in American Airlines.

"Be assured the British, Spanish and American pilots are determined that they should not only protect their futures but also share in the benefits of international consolidation."