Five Airlines Form Alliance

American Airlines and British Airways unveiled a global alliance with three other carriers Monday and said they want more partners to compete with a group led by United Airlines and Germany's Lufthansa.

Canadian Airlines and Australia's Qantas already had marketing partnerships with American and British Airways, and the Hong Kong carrier Cathay Pacific Airways came aboard Monday in the new alliance, to be called "oneworld."

The airlines say they will coordinate their flight schedules and ticketing while cooperating on their frequent flier programs to better serve customers.

Executives told a news conference that they had invited the Spanish flag carrier Iberia to join up, and that Finnair would be another strong potential candidate. They also have their eyes set on a bigger prize: Japan Airlines.

"It's really up to the Japanese to make their decision on that," said Don Carty, the chief executive at American.

"Oneworld" was launched even as American and British Airways continue their fight to gain regulatory approval for a separate deal that would give them U.S. antitrust immunity to set prices on routes across the Atlantic.

The new alliance is "not a substitute," said Bob Ayling, chief executive at British Airways.

The alliance is a first for Cathay Pacific, which said its associate carrier Dragonair, serving some destinations in China, might also join after setting up a frequent flyer program and making other necessary changes.

The Cathay Pacific chief executive, David Turnbull, said Cathay Pacific had been approached by other airlines, including the Star Alliance organized by United and Lufthansa. The other Star Alliance partners include Air Canada, Scandinavian Airlines System, Thai Airways and the Brazilian carrier Varig.

"It's taken us a long time," Turnbull acknowledged. "When you get married, you want to make sure you make the right choice. Getting unmarried can be difficult."

Alliances are becoming increasingly common in the international aviation industry, where travel is booming, but leading airlines realized long ago it wouldn't be feasible to get big enough to cover the entire globe single-handedly.

The creation of "oneworld" gives the industry two big global alliances, although there are many smaller ones such as the deal between Northwest Airlines and KLM Royal Dutch Airlines.

Virgin Atlantic Airways, the carrier run by British billionaire Richard Branson, was sharply critical. Virgin hired a truck with a sign saying "no way" to the British Airways-American alliance painted on the side, and had it parked illegally outside the news conference.

Virgin spokesman Will Whitehorn said the company would gladly pay the parking ticket and towing fee to get its point across.

Whitehorn said the five airline partners are more concerned about protecting their markets than they are about seving customers better. He characterized "oneworld" as "one company, one monopoly and millions of ripped-off customers."

The chief executives of the five airlines were asked several times whether their deal will lead to lower fares, and none would promise cheaper prices.

The airlines will not become one company; each will maintain its separate brand name and no equity stakes will be exchanged.

The five airlines say that their network will service 632 cities in 138 countries. Last year they carried a total of 174 million passengers.

Written By Dirk Beveridge, AP Business Writer