American Airlines, Qantas may revive joint venture plan under Trump

REUTERS: American Airlines Group Inc and Australia’s Qantas Airways Ltd may reapply to the US Transportation Department for permission to coordinate prices and flight schedules now the Trump administration is in charge, Qantas Chief Executive Alan Joyce said.

The pair’s application for a joint venture covering the United States, Australia and New Zealand markets was rejected in November under the Obama administration amid opposition from rival carriers Hawaiian Airlines Inc and JetBlue Airways Corp.
During its earnings call on Friday, American said it intended to refile its application for a joint venture with Qantas.
“We do plan to refile the application with Qantas,” said Steve Johnson, American’s Executive Vice President of Corporate Affairs. “It probably is a few weeks down the road ... but we are looking forward to doing that and having another opportunity to make our case.”
American Airlines shares sagged on Friday after the carrier released its fourth-quarter and full-year 2016 results, as mounting costs and growing wage pressures spooked investors.
The alliance would have the largest share of seats between 200 pairs of cities, and account for nearly 60 percent of all seats between the United States and Australia, the department said.
US President Donald Trump is expected to boost American industry through lighter regulation and his administration may take a more hands-off approach to anti-trust enforcement.
“What we need to do is work out the implications, which we are still working through and then talk about what we will do and review our options with the Trump administration,” Qantas’ Joyce told Reuters in Beijing on Thursday. “When we do, we will make an announcement of what our intentions are.”
Citi analyst Anthony Moulder said the inability to coordinate pricing meant the American Airlines flights between Australia and the United States were being sold at lower prices than Qantas flights, pressuring the Australian carrier.
“I think it has just taken perhaps a little bit longer than (American Airlines) would have hoped to where their offering has similar yields,” he said.
Regulators in Australia and New Zealand had approved the joint venture before it was rejected by the United States.