Ba Could Scrap Us Link Plan

British Airways is likely to drop its proposed alliance with American Airlines if US and European regulators do not give it the go-ahead by November, Robert Ayling, BAs chief executive said.

Ayling said BA and American Airlines had not expected regulators to take so long to approve their alliance, which was announced a year ago yesterday. The alliance envisages extensive co-operation and revenue sharing.

Ayling said approval had been held up by US and UK elections. He hoped the alliance would still win approval from the US department of transportation, the UK government and the European Commission. He said warmer relations between the Commission and the UK government would help regulators reach agreement.

 

Ayling said that BA wanted the deal approved by November, when take-off and landing slots will be allocated for summer 1998. After that it becomes more difficult. There comes a point in any transaction where not having approval is tantamount to being told no, he said.

The UK Office of Fair Trading has recommended that the alliance be allowed to proceed if the two airlines give up 168 weekly slots, or 12 round trips a day, at Heathrow airport in London. Margaret Beckett, trade and industry secretary, will make the final decision for the UK government.

The General Accounting Office, the investigative arm of the US legislature, said last week that other US carriers should be entitled to an extra 23 round trips a day to Heathrow.

Robert Crandall, Americans chairman, said on Tuesday the two airlines were encouraged by the GAOs report because it did not suggest all the extra slots should come from BA and American. Other US airlines could win underused slots or obtain them from their European partners.

Crandall said the two airlines would not go ahead with their alliance if they were forced to give up more slots than the OFT recommended.

Crandall said if the alliance was not approved, American and BA would still co-operate. They could service each others aircraft and have a code-sharing arrangement, selling seats on each others flights. They could combine corporate credit cards and frequent flyer programmes.