AA and BAA parent could merge

IF the US government relaxed its limits on foreign ownership of airlines in the country American Airways (AA) could merge with British Airways-Iberia parent International Airlines Group (IAG).

AA’s president Tom Horton has indicated that the two groups could extend their existing alliance if the restrictions are removed. Currently, foreign ownership in US domestic carriers is restricted to 25 per cent, but EU pressure could sway Washington’s obstinacy.

IAG won regulatory permission to form a transatlantic alliance with AA last year. The US$7 billion-a-year joint venture allows them to co-operate on schedules, sell each other’s flights and share revenues from transatlantic operations.

“This alliance agreement with BA and IAG is effectively a synthetic merger. Over time – I think in my working lifetime – foreign ownership rules in the US will become more flexible. This alliance could form the basis of a cross-border merger between our airlines,” Horton said.

For the time-being AA and IAG are fortifying links between London (UK) and New York (US).