British Airways has signed an agreement with American Airlines and Spain's Iberia for a transatlantic tie-up, said it will now file for antitrust immunity in the United States.
The UK carrier, which first said it was in talks with its American rival in April, said the three airlines would cooperate commercially on flights between the United States, Mexico and Canada and the European Union, Norway and Switzerland.
It said the trio would file for antitrust immunity from the U.S. Department of Transportation, and would notify regulators in the EU.
BA Chief Executive Willie Walsh told reporters he was confident the alliance would win immunity, and that the agreement included deals on revenue sharing, as well as pricing and schedule co-ordination.
"I firmly believe that the regulators will approve our application for antitrust immunity," he told a conference call, adding that the "Open Skies" agreement earlier in the year would help win approval for the alliance.
"Open Skies" allows any airline from the US or the European Union to fly to the US from Heathrow. BA and American had an application for antitrust immunity rejected in 2001 due to a shared dominance of the London airport.
"We are applying in a world very different from the world when we last applied in 2001," Mr Walsh said, adding that immunity would allow the airline to compete more effectively with other transatlantic alliances already granted immunity.
Among these are the Star Alliance, which includes Germany's Lufthansa and US-based United Airlines, and SkyTeam, which includes BA rival Air France-KLM and US-based Delta Air Lines.
Alliances allow airlines to share routes and resources and cut back on capacity without going through a merger.
Finnair and Royal Jordanian - part of the "Oneworld" alliance which also includes BA, American and Iberia but does not have antitrust immunity - will be part of the application.
However, Robert Mann, an airline consultant at R.W. Mann & Company in the US, said a successful application was not straightforward.
"BA continues to hold the vast majority of Heathrow slots (over 40 per cent) and while it indicates it is willing to relinquish some, these slots have been trading for as much as $60 million per pair," he said.
"So, relinquishing 100 slot pairs would be a $6 billion asset disposal, for which BA presumably wishes to receive fair value. The devil is in the details," he added.
Shares in BA, which is also in all-share merger talks with Iberia, were up 0.7 per cent to 257.25 pence by 1400 GMT, valuing the company at just under €3 billion.
Mr Walsh denied the deal would mean increased fares for passengers, a claim made by Virgin Atlantic President Richard Branson.
He called the argument "a broken record", but did not deny prices would rise. He said that scenario was likely to be driven by high oil prices.
"This strategic relationship strengthens competition by providing consumers with easier journeys to more destinations," he added.
Reuters