Brussels: British Airways and Iberia on Wednesday won the European Union's regulatory approval to merge and to team up with American Airlines to share more of their lucrative trans-Atlantic routes.
The companies say the two deals will help them cut costs and survive a tough business climate as they struggle with falling passenger numbers and industrial unrest.
The British Airways' merger with Iberia will create Europe's third-largest airline with a market value of around £7.5 billion (Dh41.58 billion). They will keep their existing brand identities and claim the deal will create savings in the region of £400 million (Dh2,218.04 million) a year, in just five years time.
The two loss-making airlines are among many struggling to survive after a fall in demand from both business and leisure traveling in the wake of the global credit crunch. Those who are still traveling have increasingly using cheaper or no-frills carriers.
They also plan to expand their oneworld alliance with American Airlines, which currently coordinates how they sell and operate flights between the 27-nation European Union and the United States.
They will now also jointly manage schedules, capacity and pricing on flights from Canada, Mexico, Puerto Rico, Norway and Switzerland as well.
The European Commission said it had no issues with British Airways and Iberia merging since they don't compete directly on most routes and would continue to face rivalry when they do, on flights from London to Madrid and Barcelona for example.
However regulators did find problems with the oneworld deal and only cleared it after the three airlines made a binding promise to cede valuable take-off and landing slots to rivals to help them start new routes between London and New York, Boston, Dallas and Miami.
The commitment to satisfy the EU requirements will last 10 years and the companies can be fined up to 10 per cent of yearly global turnover if they don't stick to their commitments. Airlines that wish to start new services to the four US cities will be able to choose to buy slots at New York's John F Kennedy airport and at either London Gatwick or Heathrow.
