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Proposed Joint Business Agreement With British Airways And Iberia

Arbitrator says American Airlines in compliance with pilot contract

eTN Staff Writer  Oct 15, 2009

An independent arbitrator has ruled that American Airline's (AA) proposed Joint Business Agreement (JBA) with British Airways and Iberia does not violate its pilot contract. The arbitrator also conducted a series of mediated discussions with the Allied Pilots Association (APA), during which American offered concrete proposals to address APA's concerns about job security.

The company also offered protections that AA's share of the flying as part of the JBA would remain relatively proportional over time. The company believed that this would address the APA's core concerns, but instead the APA rejected it. The arbitration decision cited a history of prior contract negotiations supportive of international codesharing with British Airways and the likely economic benefits to American of the Joint Business Agreement.

American Airlines remains optimistic that the United States Department of Transportation (DOT) will conduct a thorough assessment of its application and conclude that it will improve competition and benefit customers. According to AA, this agreement is designed to encourage growth and increase revenues so all the participating airlines and airline employees will benefit, and it will also offer customers access to an expanded network with seamless service around the globe.

The Joint Business Agreement is expected to help AA generate needed additional revenue that will enhance its ability to invest in improved products and services for itscustomers and to continue to provide great jobs for its employees. The proposed Joint Business Agreement with British Airways and Iberia is based on a revenue-sharing arrangement, which means the only way an airline gets to share in the revenues is to fly. AA stated, that as a result, the more American Airlines flies, the more revenue it would receive. The less AA flies, the less revenue it would receive.

The airlines believes the financial benefits created by the agreement and antitrust immunity will allow AA to be much more competitive on corporate contracts, offer consumers greater access to discounted fares and routing choices, and improve opportunities for growth - all of which is expected to lead to additional revenue.

Leaders of the Allied Pilots Association, however, continue to disagree with this initiative, and about 50 American Airlines pilots picketed the Transportation Department’s headquarters in Washington on Wednesday in protest. Allied Pilots Association spokesman Scott Shankland said the proposed alliance poses a "very real threat to American jobs" and would adversely affect passengers. The union planned to meet with senators and Obama administration officials.

The proposed American Airlines, British Airways, Iberia Airlines antitrust immunity proposal has the support of 28 US Senators, 135 US Representatives, 40 Governors, 109 Mayors, and 131 airports from around the nation. In total, there have been more than 3,300 letters of support for the application, including 615 travel-related organizations; 324 economic, education, and not-for-profit organizations; and 442 corporations, small business, and for-profit organizations.

AA's application for antitrust immunity is pending with the DOT, and they continue to discuss the benefits of their plans with regulators in the European Union.

Arbitrator says American Airlines in compliance with pilot contract
Photo from Abaca Press/Olivier Douliery via MCT

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