EU approves air deal

British Airways PLC
10 December 2003

EU APPROVES AIR DEAL

British Airways, Iberia Airlines and BA franchise partner GB Airways have been
given approval by the European Commission for an alliance which the carriers say
will deliver significant benefits to international air travellers and to their
businesses.

Following a three month consultation period that ended today December 10, the EU
has granted the airlines, exemption from competition legislation for six years,
subject to conditions necessary to maintain competition on four UK-Spain routes.

The exemption allows extensive cooperation, including,

  • Joint network planning and coordinated capacity and pricing
  • Joint sales operations
  • Use of profit-sharing or other economic co-operation
  • Joint pricing, management, sales and handling of cargo

British Airways' chief executive, Rod Eddington, said: 'This is a sensible step
forward in our efforts to progress consolidation in Europe.  The alliance will
give customers access to more destinations and more convenient schedules.  It
will also bring significant cost benefits which will be passed on to customers
in lower fares.'

Iberia's president, Fernando Conte, said: 'This agreement is a major step
forward in our already solid relationship with British Airways which will make
us more competitive in today's difficult environment, while offering our
customers a larger range or services, frequencies and destinations.  The aim of
this cooperation model is to achieve synergy benefits while preserving the
separate identities of the two companies.'

The regulatory conditions set by the EU under Article 81 (3) of the Treaty of
Rome include an undertaking by the airlines to provide:

•    Enough slots at Gatwick and Madrid airport to allow a competitor to
     operate a maximum of four daily return services from London Gatwick to 
     Madrid.

  • Slots at Gatwick to allow a competitor to operate one daily return service
    to Bilbao.

  • Slots at Gatwick to allow a competitor to operate a daily return service
    to each of Valencia and Seville, subject to growth and demand.

  • A freeze on frequencies from London to Madrid, Barcelona, Bilbao, Valencia
    and Seville for two seasons following handover of the slots (until March
    2005 for Barcelona).

  • BA, Iberia and GB Airways to enter into an interline and frequent flyer
    agreement with a competitor, if requested, on London Heathrow to Madrid,
    Bilbao, Valencia and Seville.


                                      ends



December 10, 2003                164/KG/03



Notes to editors

  • British Airways and Iberia first began working together in 1999 with a
    code-sharing deal covering domestic UK and Spanish destinations.  Today, as
    well as developing sales representation for each other in 27 countries
    worldwide, the two carriers codeshare on 40 routes.

  • The airlines signed an alliance agreement in July 2002, subject to
    approval from the EU, to work more closely across their global networks
    including the highly competitive market between UK and Spain.

  • As part of their oneworld co-operation, British Airways and Iberia have
    also established joint check-in, ticketing, lounges and handling in 24
    cities, mostly in Europe and South America.

  • In March 2000, British Airways completed its acquisition of a 9% stake in
    Iberia.  The airline has two directors on Iberia's board.

  • Franchise partner GB Airways operates in British Airways colours to 14
    destinations in Spain and already codeshares with Iberia.




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