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BA Signs Agreement with American Airlines, Iberia

LONDON, Aug 14 (Reuters) - British Airways said on Thursday it had signed an agreement with American Airlines and Spain's Iberia for a transatlantic tie-up, and will now file for anti-trust immunity in the United States.

The UK carrier, which first said it was in talks with its American rival in April, said the three airlines would cooperate commercially on flights between the United States, Mexico and Canada and the European Union, Norway and Switzerland.

It said the trio would file for anti-trust immunity from the U.S. Department of Transportation also on Thursday, and would notify regulators in the EU. Finnair and Royal Jordanian -- part of the 'Oneworld' alliance which also includes BA, American and Iberia but does not have anti-trust immunity -- will be part of the application.

Alliances allow airlines to share routes and cut back on capacity without going through with a merger. Other alliances with anti-trust immunity include the tie-up between BA rival Air France-KLM and U.S.-based Northwest Airlines.

Shares in BA, which is also in all-share merger talks with Iberia, were up 3.2 percent to 263.5 pence by 1227 GMT, valuing the company at just over 3 billion pounds ($5.62 billion).

"This strategic relationship strengthens competition by providing consumers with easier journeys to more destinations," BA Chief Executive Willie Walsh said in a statement. He added that the application for immunity came against the backdrop of the 'Open Skies' agreement, which allows any U.S. or EU airline access to Heathrow.

BA and American had applied for immunity before 'Open Skies' but without success.

(Reporting by John Bowker; Editing by Erica Billingham) ($1=.5341 Pound) Keywords: BRITISHAIRWAYS/ALLIANCE TFN.newsdesk@thomson.com jag COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved.

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