AA, BA confident of expanding alliance by 2010

KUALA LUMPUR, Malaysia — American Airlines and British Airways voiced confidence Monday of winning approval from U.S. and European authorities to allow them to cooperate on trans-Atlantic flights by 2010.

American Airlines is seeking immunity from U.S. antitrust laws so it can cooperate with BA, Iberia Airlines, Finnair and Royal Jordanian, which are partners in the Oneworld alliance that allow them to sell tickets on each other’s airlines and give reciprocal miles.

With an antitrust exemption, they can now work together to set pricing and schedules. It will be the closest thing to a full merger that the airlines can form without violating limits on foreign ownership of U.S. airlines.

BA Chief Executive Willie Walsh said their case was “stronger than ever” as two other group of airlines were already working together on prices, schedules and other details.

“This is about leveling the competitive playing field and we are confident our case has significant merit,” Walsh told reporters on the sidelines of an airline conference in Kuala Lumpur. “We expect to get approval in the current calendar year, which will allow us then to proceed with the joint business by 2010.”

Carriers are vying to bolster cooperation on sales and scheduling to cut costs amid a slump in demand caused by the global recession.

British, American and its alliance partners argue that they should get antitrust immunity because two competing alliances already have it — Star (Lufthansa, United, and beginning this fall, Continental) and SkyTeam (Delta, Air France-KLM).

Authorities have rejected appeals from American and BA for closer cooperation twice, but prospects for their cooperation on trans-Atlantic flights are brighter because of difficulties facing the industry in recent years.

Critics, led by Virgin Atlantic Airways head Richard Branson, say American and BA are already too dominant and immunity will lead to higher fares on U.S-U.K. routes. American’s own pilots’ union also feared it will shift flying assignments to lower-cost foreign carriers with more open-skies agreements.

American Airlines Chief Executive Gerard Arpey said U.S. and European authorities were expected to make a decision by the end of October. He said their bid has received support from business groups, politicians and airports, and “we are confident of a positive outcome on both sides.”

He said allowing them equal footing with other airline groups would benefit consumers by providing greater travel options and more attractive fares as competition increases on international routes.