Published: 04 Aug 2008: British Airways is hopeful of finalising a tie-up with American Airlines within weeks.
As per the information available, the talks are taking place alongside negotiations between BA and the Spanish airline Iberia about a possible merger.
The two airlines are already working together as partners in the One World alliance, which lets member airlines share flight capacity and airport facilities. But it is understood that, if agreed, a new deal would see them work much more closely to try to cut costs in areas such as technology, ticketing and administration.
For its part, BA has also issued a profit warning after a collapse in its earnings during the first quarter of this financial year. The airline said that its pre-tax profits had fallen by 88 percent in the three months to June 30 because of rising fuel bills and the economic environment.
BA has lowered its full-year profit forecast from about £600million to just above break even. The airline has also reduced its revenue growth forecast from four percent to three percent to reflect weaker consumer demand. The new profit target is a remarkable turnaround for the airline, which made £875 million in profits last year.
Willie Walsh, BA´s chief executive, said that the airline had increased fares partially to offset the cost of fuel and would reduce capacity in the quieter winter months. It plans to cut capacity by 3.1 percent, mostly by reducing the frequency of short-haul flights, although four routes in Europe will be cut entirely.
Walsh called the present environment "the worst the industry has ever faced ... The combination of unprecedented oil prices, economic slowdown and weaker consumer confidence has led to substantially lower first-quarter profits."