Virgin opposes British Airways merger with American Airlines

Richard Branson, the founder of Virgin Airlines, has reportedly sent a letter to both Republican presidential candidate John McCain and his Democratic rival, Barack Obama, on the pitfalls of allowing a merger between British Airways and American Airlines to go through. Branson argues that a British Airways-American Airlines fusion would lead to far less competition when it comes to the transatlantic market, and this would negatively impact both UK and US travellers. According to a Press Association report, Branson believes that it is all but certain that a merger would mean higher ticket prices for passengers and significant redundancies in both Britain and the US.

American regulators will soon be examining a proposal that would see British Airways and American Airlines enter into close cooperation on transatlantic routes. This new deal would involve a crucial revenue sharing structure between the two airlines. British Airways has indicated that it expects a formal proposal to be completed within about a week, after which it will be sent on to regulators for approval. Meanwhile, the UK’s flag carrier is in separate negotiations with Spain’s Iberia, in a bid to merge with this airline as well. All three airlines already cooperate in a number of ways, since they are members of the oneworld alliance.

According to media reports, the current plan involves the creation of a joint company which will oversee the transatlantic flights of the three carriers. Most analysts believe that this is the only realistic option for a merger, since relatively tough ownership rules in the US would not allow for a complete fusion.

www.ba.com