British Airways says it has sealed an alliance with American Airlines that will allow the two carriers to fix fares, routes and schedules together.
The move will also include Spain's Iberia, which is merging with BA.
With aviation fuel prices near record levels and spending on air travel slowing, airlines are looking at ways to cut costs.
But the carriers will have to persuade the US that the deal does not break US rules on foreign ownership Soaring fuel bill hits BA profits ...
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Venus outshines Serena, then they win doubles ... of airlines.
Challenges
Under the business agreement, the three airlines will cooperate on flights between the US, Mexico and Canada and the EU, Switzerland and Norway.
"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," said Gerard Arpey, chairman and chief executive of AMR Corp, the parent company of American Airlines.
However, BA's rival Virgin Atlantic said the plan would reduce competition in the airline industry.
"What they're proposing is to create the world's biggest airline with American Airlines," said Virgin's Paul Charles.
"But we know what dominant players do - they snuff out competition, they raise prices and they become even more dominant."
(BBC)
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