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August 14, 2008

American Airlines, British Airways and Iberia Sign Joint Business Agreement

By Pardhasaradhi Gonuguntla

FORT WORTH, LONDON and MADRID — American Airlines, British Airways and Iberia have signed a joint business agreement on flights between North America and Europe and plan to expand their global cooperation.

This relationship will benefit consumers by providing easy, seamless and convenient travel to more global destinations with better connections, improved flight schedules and enhanced frequent flyer benefits, the companies said in a prepared press release. The three airlines are part of a global alliance called OneWorld.

The airlines plan to file today for worldwide anti-trust immunity from the US Department of Transportation and will notify the appropriate regulatory authorities in the European Union.

In addition, fellow oneworld members Finnair and Royal Jordanian are included in the anti-trust immunity application.

Under the joint business agreement, the three airlines will cooperate commercially on flights between the United States, Mexico and Canada, and the European Union, Switzerland and Norway while continuing to operate as separate legal entities. They will expand their codeshare arrangements on flights within and beyond the EU and US, significantly increasing the number of destination choices that the airlines can offer customers.

According to the statement, “This agreement would enable oneworld to compete effectively with rival global air alliances that have already received transatlantic anti-trust immunity. Currently, six airlines in SkyTeam and nine Star Alliance airlines have such immunity.”

Gerard Arpey, chairman and chief executive of AMR Corp., the parent company of American Airlines, said: ‘ We believe our proposed cooperation is an important step towards ensuring that we can compete effectively with rival alliances and manage through the challenges of record fuel prices and growing economic concerns. In addition, we believe we will be more effective competitors with greater ability to invest in our products and services. As a result, this business agreement will create positive outcomes for our customers, shareholders, employees and the communities we serve.’

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Willie Walsh, British Airways’ chief executive, said: ‘This strategic relationship strengthens competition by providing consumers with easier journeys to more destinations with better aligned schedules and frequencies. We are applying for EU US anti-trust immunity in a changed regulatory world where London Heathrow is open to any US or EU airline that wants to fly to the United States and where rival alliances have immunity.’

Fernando Conte, Iberia chairman and chief executive, said: ‘Customers will benefit the most from this relationship as they will have better connections to more destinations around the world. It will increase competition as the three global airline alliances will play under the same rules. We are taking a very important step towards consolidation which is necessary in today’s aviation industry.’

British Airways and American Airlines had previously sought anti-trust immunity for trans-Atlantic operations, but withdrew the application.

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