Shares in British Airways (BA) were up more than 4% this morning after US regulators have given the go-ahead to permit American Airlines and BA to coordinate schedules and share costs.
Preliminary approval of the alliance was approved by the Department of Transportation (DOT) over the weekend.
A combined firm would create the world’s third largest airline and offer lower fares on more routes.
Spanish carrier, Iberia, Finnair Oyj and Royal Jordanian Airlines are also part of the agreement.
BA already owns 13.5% of Iberia, and the two airlines have a code-sharing agreement under the OneWorld global alliance, which allows them to sell seats on each other’s services.
Oneworld is the third-largest global airline alliance behind Star and SkyTeam.
Meanwhile, the news is good for BA but comes at a time when a strike ballot is looming.
However, Sir Richard Branson, boss of Virgin Atlantic, one of BA’s major UK competitors, is opposed to the merger.
He said: “The US Department of Justice, who are the experts in competition issues, called for strict remedies to protect the public interest, because the alliance will blatantly harm competition and the consumer.”
He adds: “The Department of Transportation has chosen to stick two fingers up at them. Millions of transatlantic travellers will be adversely affected if the alliance receives final approval.
“In my personal opinion, this draft decision is a real kick in the teeth for consumers and they will be paying the price for it for years to come,” added Branson.
The DOT will decide whether to give the plan immunity from anti-trust legislation after a consultation period of 60 days.
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