BA, American Airlines and Iberia have signed a business deal to expand their global
co-operation.
Under the agreement, the three carriers will continue to operate as separate airlines but will "co-operate commercially" on transatlantic flights between the US, Mexico, and Canada, and the EU, Switzerland and Norway.
The airlines, all members of the oneworld alliance, will also expand their codeshare arrangements on other flights outside the EU and US.
Virgn Atlantic said the deal would create a "monster monopoly that would push up ticket prices and substantially reduce competition on the busiest air corridor in the world."
As part of the agreement, the three carriers have also applied to the US Department of Transportation for worldwide anti-trust immunity.
They said they would also "notify" the EU regulatory authorities of the agreement.
The carriers claimed the deal would "benefit consumers" by "providing easy, seamless and convenient travel to more global destinations with better connections, improved flight schedules, and enhanced frequent flyer benefits."
They said it would also enable the oneworld alliance to "compete more effectively around the world with other global alliances."
Gerard Arpey, American's chairman and ceo, said the deal was an "important step" in enabling the three airlines to compete more effectively.
He added: “We believe we will be more effective competitors with greater ability to invest in our products and services.
"As a result, this business agreement will create positive outcomes for our customers, shareholders, employees and the communities we serve."
Willie Walsh, BA's ceo, said: "This strategic relationship strengthens competition by providing consumers with easier journeys to more destinations with better aligned schedules and frequencies."
Fernando Conte, Iberia's chairman and ceo, said: "Customers will benefit the most from this relationship as they will have better connections to more destinations around the world.
"It will increase competition as the three global airline alliances will play under the same rules. We are taking a very important step towards consolidation which is necessary in today's aviation industry."
Sir Richard Branson, president of Virgin Atlantic, referring to two previous failed attempts by BA to link up with AA, said if the deal were to be approved it would be "third time unlucky for consumers."
He added: "It will still be bad for passengers, bad for competition, and bad for the UK and US aviation industry.
"BA argues that the aviation landscape has changed since their last failed application – I disagree, nothing has changed.
"Open Skies has not delivered the greater competition that was promised because Heathrow is full. BA/AA and Iberia would still be unacceptably dominant, with nearly half of all of the slots at Heathrow, leaving competitors powerless to take them on."