American Airlines expects to win U.S. approval by October to form an alliance with British Airways and Spain's Iberia , and it is pinning its hopes on intra-alliance competition and global partnerships to help it survive, an executive said on Wednesday.

American Airlines parent AMR Corp , British Airways, Europe's third-largest carrier by revenue, and Iberia have applied for U.S. government antitrust immunity to form a transatlantic alliance to work together on fares, schedules and cost cutting.

The carriers have been under growing pressure after the U.S. government earlier this month approved a similar request by Continental Airlines to join UAL Corp's United Airlines in the global Star Alliance, giving Star Alliance members a competitive advantage on some international routes.

We remain optimistic that we'll accomplish the approval by October and implement it after that, Craig Kreeger, American Airlines senior vice president, told Reuters in an interview in Tokyo.

It seems that intra-alliance competition and building a global network with partners is the long-term way in which airlines will succeed, and this represents a very big step in that process and an important one, he said.

BA and American had an application for antitrust immunity rejected in 2001 due to concerns that the alliance would have control of an unfair number of takeoff and landing slots at Heathrow airport.

(Editing by Hugh Lawson)

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