LONDON - An alliance between British Airways PLC, American Airlines and Iberia SA should be blocked, competitor Virgin Atlantic Ltd. said on Thursday, amid reports the trio are close to applying for U.S. antitrust immunity to form a transatlantic joint venture.

The three airlines aim to reach an accord on profit and revenue sharing this month, the Financial Times reported, citing executives at the carriers.

"BA has been in talks with American Airlines and Iberia for some time, but no decisions have been reached," said BA spokeswoman Cathy West.

BA and AMR Corp.'s American, the world's largest carrier, have failed in the past to win an exemption from U.S. antitrust laws to work more closely together because of their dominance at London's Heathrow Airport, where the pair have more than half the capacity to and from the U.S.

However, they are expected to argue that the competitive situation has changed since the "open skies" agreement between the U.S. and the European Union came into force in March, allowing airlines to fly to and from any point in the U.S. and the EU.

That would allow more airlines to fly into Heathrow, if they can obtain landing and take-off slots, but Virgin Atlantic said an alliance would still be anticompetitive.

"We would oppose this attempt to create an anticompetitive alliance," said Virgin spokesman Paul Charles. "It would form a dominant mega-power on transatlantic air routes from two of the largest EU members, forcing up ticket prices for passengers and restricting choice."

BA Chief Executive Willie Walsh has previously balked at proposals from regulators that would provide antitrust immunity in return for the carrier surrendering some of its valuable takeoff and landing slots at Heathrow, Europe's busiest airport.

Takeoff and landing slots at the airport are sold for as much as 30 million pounds ($60 million) a pair.

U.S. airlines have been trying to combine or form new alliances since Delta Air Lines Inc. announced plans to purchase Northwest Airlines Corp. earlier this month, and the consolidation push has now spread further afield.

The European Commission said it had not been approached by American, BA or Iberia about the reported tie-up.

"Generally speaking the Commission is in favour of competition ... and generally speaking we take the view that if you apply competition rules there are more chances companies will address challenges in the most effective manner," said EU spokesman Jonathan Todd.

"That said, to the best of my knowledge we have not had any approaches from these airlines thus far and the Commission's attitude would very much depend on precisely what they were intending to do."

BA said in April that it was talking with AMR Corp.'s American Airlines, the world's largest carrier, and Continental Airlines Inc. about possible "opportunities for co-operation. " Continental later teamed up with United Airlines.

American already has separate agreements with BA and Iberia.

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