British Airways confirmed merger discussions with Qantas Airways. British Airways in a statement said “it is exploring a potential merger with Qantas Airways Limited via a dual-listed company structure,” but warned, “There is no guarantee that any transaction will be forthcoming and a further announcement will be made in due course, if appropriate.”

In addition to its newly disclosed discussions with Australia’s flag carrier, British Airways said it continues to move forward with discussions in its planned merger with Spain’s Iberia.

Effective September 1, 2008, British Airways will introduce a change to the allowance of excess baggage and an increase to their excess baggage rates. Customers paying for excess baggage online at ba.com prior to check in will receive a 20% discount. Online payment for excess baggage is accepted anytime prior to check in. A maximum of 10 (ten) excess bags per customer will be allowed. Customers will need to use our British Airways cargo facilities if they exceed the excess baggage allowance.

New excess baggage rates paid at the airport on day of departure will be:

1. Intercontinental/Longhaul: 90/$165 one way (previously 75/$150)
2. Intra European/Shorthaul: 35/$65 one way (previously 30/$60)
3. UK domestic flights: 25/$45 one way (previously 20/$40)

Charges for excess baggage paid online at ba.com prior to check in will be:

1. Intercontinental/Longhaul: 72/$132 one way (previously 60/$120)
2. Intra European/Shorthaul: 28/$52 one way (previously 24/$48)
3. UK domestic flights: 20/$36 one way (previously 16/$32)

Key changes for the Heavy Bag Charge:

1. Customers who check in bags that exceed their weight allowance (23kg/51lbs) will be charged a flat rate of 25/$50 per bag from November 26, 2008.
2. The Heavy Bag Charge can only be paid at the airport.
3. No bag weighing over 32kgs/70lbs will be accepted for carriage.

Today American Airlines, British Airways and Iberia have signed a joint business agreement on flights between North America and Europe and plan to expand their global cooperation.

This deal will benefit customers by providing easy, seamless and convenient travel to more global destinations with better connections, improved flight schedules and enhanced frequent flyer benefits. In addition, this will improve customer choice by enabling the oneworld global alliance, of which American, British Airways and Iberia are key members, to compete more effectively around the world with other global alliances.

Under the joint business agreement, the three airlines will cooperate commercially on flights between the United States, Mexico and Canada, and the European Union, Switzerland and Norway while continuing to operate as separate legal entities. They will expand their codeshare arrangements on flights within and beyond the EU and US, significantly increasing the number of destination choices that the airlines can offer customers.

Customers will also benefit from expanded opportunities to earn and redeem frequent flyer miles and elite tier benefits on flights worldwide and continued reciprocal airport lounge access.

Gerard Arpey, the chairman and chief executive of AMR Corp., the parent company of American Airlines, said: “We believe our proposed cooperation is an important step towards ensuring that we can compete effectively with rival alliances and manage through the challenges of record fuel prices and growing economic concerns. In addition, 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, British Airways’ chief executive, said: “This strategic relationship strengthens competition by providing consumers with easier journeys to more destinations with better aligned schedules and frequencies. We are applying for EU US anti-trust immunity in a changed regulatory world where London Heathrow is open to any US or EU airline that wants to fly to the United States and where rival alliances have immunity.”

Fernando Conte, Iberia chairman and chief executive, 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.”