IAG eyes stake in AA as carrier faces record fines

International Airlines Group (IAG) has said that it would consider buying a stake in beleaguered American Airlines in the hope that such a move would ensure the US carrier remained part of the Oneworld alliance.

With IAG subsidiary, British Airways, operating lucrative Trans-Atlantic flights in partnership with American, IAG chief executive Willie Walsh said the idea of investing in AA was “something we are going to look at”.

“If we can make the case that there is additional strategic value to be achieved, then it is certainly something we are prepared to do,” he told the Financial Times.

Speaking to a possible merger between American and US Airways, Mr Walsh said he saw “definite attractions” in a union between the two carriers.

While an American Airlines-US Airways merger would likely result in the combined entity remaining with Oneworld, a takeover by Delta Air Lines, a member of SkyTeam, would almost certainly see AA terminate its current alliance arrangements, and therefore its joint venture with BA.

However, a potential marriage between American and US Airways already faces stiff opposition from the American Antitrust Institute (AAI) and Business Travel Coalition (BTC), who in a White Paper sent to the US Department of Justice, have flagged a number of key issues for investigation.

As well as drastically reducing competition on a number of routes, a possible merger could create regional strongholds at key airports nationwide and starve smaller communities of important air service, according to the White Paper.

“The legacy mega-merger would complete a troubling transformation of the domestic U.S. industry to four powerful, closed airline systems (American, Southwest, United Continental, and Delta) that would control over 70 percent of the U.S. market,” BTC chairman and report co-author Kevin Mitchell stated.

Meanwhile, the Federal Aviation Administration (FAA) is seeking a record US$162.4 million from American Airlines parent, AMR Corp, for alleged violations of US safety standards going back several years, the Wall Street Journal reported.

AMR filed for Chapter 11 bankruptcy protection in November last year.

In better news for American, AA this week became the first US carrier to offer a luggage delivery service for passengers wishing to bypass airport baggage claim.

Operating in partnership with BAGS VIP Luggage Delivery, the service is available at more than 200 US domestic airports and select international pre-clearance cities.

Sourced: etravelblackboardasia