British Airways tie-up with American Airlines gets green light

British Airways has edged closer to a merger with American Airlines after US regulators gave a tie-up the green light. Preliminary approval of the alliance, which has been on the cards for 12 years, was granted by the US Department of Transportation on Saturday evening.

It allows BA and AA to collaborate on pricing and services on lucrative transatlantic routes providing they give up fair pairs of take-off and landing slots between the US and Heathrow. In 2002, a proposed merger was abandoned because regulators required 16 pairs of slots to be given up.

The US go-ahead is a welcome boost for BA, which is facing industrial action by cabin crew next month. Opponents of the proposal now have 45 days to explain why a merger should not be made final, after which the applicant airlines would have 15 days to respond. Sir Richard Branson, president of Virgin Atlantic, has criticized the decision. He said: "This draft decision is a real kick in the teeth for consumers." Meanwhile, talks begin in Madrid today on the second phase of the Open Skies agreement. European airlines want to be able to merge with American counterparts, but at present US regulations prevent non-American companies from owning more than 25% of US aircraft stock.