Dear Sens. Barack Obama and John McCain, "Just because
life is tough out there, you shouldn't rid yourself of competition." - Richard Branson, president of Virgin Atlantic Airways.
Branson's letter, which he discussed on BBC Radio, to the U.S. presidential candidates is referring to a
deal between British Airways plc and American Airlines seeking antitrust immunity to coordinate flights and schedules across the Atlantic. He continued, "The job of the regulators is to assess the long-term impact of the alliance on competition, not to provide special protection from the immediate challenges of the economic cycle, with which every other airline has to deal with." Branson said BA and American are using the Open Skies agreement, which in March allowed airliners to fly anywhere between the U.S. and Europe, as a mask for a JV that would create a megapower in trans-Atlantic flights. Along with high fuel prices and an economic trough, BA is expected to say the recent wave of M&A in the industry has made competition tough.
The Deal's Lou Whiteman said the transaction really has little to do with the economic cycle, it has everything to do with creating a seamless international network -- Branson cares more about this one because his airline is based out of London-Heathrow, and not in Paris or Atlanta or Amsterdam or Frankfurt, so Virgin Atlantic stands to be a big loser if this wins out.
Two weeks ago, TheDeal.com reported BA and Spain's Iberia Líneas Aéreas de España SA -- which has strong links in South America -- were in
talks about an all-share merger that would create Europe's No. 2 airline. American Airlines and BA tried to form a joint venture in the past, but were deterred by antitrust authorities. One report said BA expected preparations for the deal to be completed within weeks and an application to U.S. regulators for antitrust immunity would be filed shortly afterward.
In July, BA agreed to buy French executive airline L'Avion for £54 million ($108 million) to secure routes between Paris and New York and expand its new OpenSkies unit. -
Baz Hiralal
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