American Airlines woos China Eastern

AMERICAN Airlines is negotiating with China Eastern Airlines to have it join the Oneworld alliance.

Tom Horton, chief financial officer of American’s parent company, AMR, also revealed that American is also in talks with a Brazilian carrier to do the same (probably Gol Linheas Aereas Inteligentes, which began code-sharing with American last year).

“There are some opportunities for cost savings, though not to the extent one might be able to achieve with a full merger. You can cooperate in areas such as procurement, co-locate at airports.”

Horton said the reason for increased alliances rather than mergers was primarily due to restrictions on foreign ownership of US airlines of only 25 per cent of voting stock.

“It is an impediment to cross-border mergers,” he said. “I think we are seeing an evolution, seeing these alliances become tighter-knit partnerships. They started as loose marketing agreements, for code-sharing, frequent linkages, emergence of global alliance groupings. We are now seeing those groupings forming tight economic relationships.”

American Airlines and British Airways have just been given permission from the US government to cooperate with Iberia on lucrative trans-Atlantic services, after trying and being denied twice before.