BELGIUM - BA, Iberia merger bid approved

BRUSSELS (AP):

British Airways and Iberia yesterday won the European Union's regulatory approval to merge and to team up with American Airlines to share more of their lucrative transatlantic 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.

British Airways' merger with Iberia will create Europe's third-largest airline, with a market value of around $7.5 billion. They will keep their existing brand identities and claim the deal will create savings of euro400 million ($530 million) a year, by the fifth year.

The two loss-making airlines are among many struggling to survive, after a fall in demand from both business and leisure travellers in the wake of the global credit squeeze. Those who are still travelling have increasingly turned to the cheaper fares of no-frills carriers.

Expand alliance

BA and Iberia also plan to expand their one-world 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.

BA and Iberia said they expect the US Department of Transportation to clear the deal shortly, allowing the airlines to start the joint business in the fall.