U.S. DEPARTMENT OF JUSTICE OPPOSES AMERICAN AIRLINES-BRITISH AIRWAYS COMBINATION

The proposed transatlantic alliance between American Airlines (AA) and British Airways (BA) is so highly anticompetitive that it has been opposed by the U.S. Department of Justice (DOJ), according to three major U.S. airlines.

Continental Airlines (NYSE:CAL), Delta Airlines (NYSE: DAL) and Northwest Airlines (Nasdaq: NWAC) applauded the DOJ for taking a stand against the alliance in its filing with the U.S. Department of Transportation (DOT).

The DOJ stated that the alliance threatens a substantial loss of competition which would likely result in higher air fares and reduced service.

The DOJ’s position is consistent with the position it took in 1998, when AA-BA abandoned a very similar plan for cooperation.

British Airways is already 65 percent larger than its next largest competitor between the U.S. and U.K. Combined, American and British Airways would dominate U.S.-U.K. routes, being 300 percent larger than the nearest competitor.

Nearly 81 percent of all U.S.-Heathrow passengers would have reduced or no competition if American and British Airways were allowed to join forces.

Other recent developments in the AA-BA case include:

Dec. 14 – Continental, Delta and Northwest filed an emergency motion with the U.S. Department of Transportation (DOT) to require British Airways to make available its strategic planning study that includes information pertinent to the case.

Dec. 12 – Delta filed a complaint with the European Commission requesting a formal inquiry to determine if the proposed alliance infringes on EC competition law.

Nov. 27 – Twenty U.S. Senators urged the Bush Administration to deny antitrust immunity. In addition, several state governors have said the alliance will put their states at a competitive disadvantage by preventing them from improving their states’ international air service

· Nov. 7 – The U.S. Senate Subcommittee on Antitrust, Business Rights & Competition conducted a hearing on the proposed American Airlines-British Airways arrangements.