U.S. Investigating Two Carriers’ Alliance Plan

The Justice Department is investigating a proposed alliance between American Airlines and British Airways to determine whether it could hurt competition, officials said Monday.

Department spokesman Bill Brooks confirmed that the agency’s antitrust division is reviewing the proposal by British Airways and American to coordinate various services, among them flight schedules, fares and passenger and cargo service. Both airlines have asked the department for an exemption from federal antitrust laws similar to the ones granted other airline alliances.

British Airways spokesman Sandy Gardiner said the investigation was expected.

Representatives of British Airways and American met with department officials in June, after the airlines announced their plan, to request an expedited review.

Part of the proposed arrangement calls for them to pool profits on North Atlantic routes and integrate their schedules.

Shares of American parent AMR Corp. fell $3.25 to $82.25, and American depositary receipts of British Airways rose $1 to $84.375, both on the New York Stock Exchange.

If the alliance takes effect as proposed, a traveler going from Dallas to the Middle East, for example, would be ticketed by American. He or she would fly on American to London, then to the Middle East on British Airways. The carriers said frequent fliers would get mileage credits on either airline and could pool miles in existing accounts.

British Airways rival Virgin Atlantic is unhappy with the plan. American and British Airways account for about 60% of the air traffic between the U.S. and Britain. The Justice Department has asked Virgin for documents relating to its 1993 antitrust lawsuit against British Airways, Virgin spokesman Richard D’Ambrosio said. That case is pending in federal court in New York.

Gardiner said the alliance would not be as large as other airline pacts in terms of the number of cities served. The British Airways-American agreement would serve 35,873 pairs of cities, whereas the alliance between United and Lufthansa German Airlines serves 55,212 pairs. A call to American Airlines was not immediately returned.