American Airlines talking to British Airways, Continental about Partnership

Apr. 30 — American Airlines Inc. is talking about a partnership with Continental Airlines Inc. and British Airways PLC, American and British Airways said Wednesday.

The talks don't involve any plans for a merger, but possible ties on frequent-flier programs, code-sharing and possibly a renewed attempt to get antitrust immunity for American's and British Airways' existing trans-Atlantic alliance.

The airlines gave little detail of what is being discussed.

"British Airways is exploring opportunities for co-operation with American Airlines and Continental Airlines," British Airways said in a terse announcement. "Further details will be announced when appropriate."

American spokesman Charley Wilson confirmed that the Fort Worth-based carrier has been having conversations with British Airways, its partner in the Oneworld global alliance, and Houston-based Continental.

Speculation increased that Continental would seek a partnership with American after Continental announced Sunday that it would not pursue a merger — after weeks of reports that Continental had been talking seriously to United Airlines Inc. parent UAL Corp. about a possible marriage.

On April 14, Delta Air Lines Inc. and Northwest Airlines Corp. announced they planned to merge, setting off a mad scramble by other airlines to seek their own merger partners or new alliances.

UAL is now said to be in advanced talks with US Airways Group Inc., formed in 2005 by the merger of America West Holdings Corp. and US Airways.

Asked about American's plans, Mr. Wilson said that there "are a number of possibilities. Any further details will be released at a further time. Discussions are still underway."

American and British Airways have twice applied for antitrust immunity from British and US antitrust regulators. They abandoned their last attempt in 2001 after authorities said they would have had to give up several hundred landing and takeoff slots at London's Heathrow Airport, where British Airways has had a dominant market position.

A 1977 treaty restricted US-Heathrow to only four airlines, two from the United States and two from the United Kingdom. British Airways and American held those rights, along with Virgin Atlantic Airways and United Airlines Inc.

However, the US government and European Union implemented a new "open skies" treaty March 30 that allows any airline entry into Heathrow if they could find someone to sell them the operating slots.

That change has prompted American and British Air executives to reexamine their application.

The other two global airline alliances — SkyTeam, with Northwest Airlines, Delta and Continental as the main US members, and Star Alliance, with United and US Airways — have some antitrust immunity on their trans-Atlantic operations.

Continental on Sunday said although it had decided not to merge, "We will, however, continue to review potential alliances and our membership in SkyTeam. We are considering alternatives to SkyTeam as we carefully evaluate which major global alliance will be best for Continental over the long term."