Alliance with American faces delay until next summer

The alliance between British Airways and American Airlines is facing a further delay of up to one year, shareholders were warned yesterday, writes Michael Harrison.

Bob Ayling told the annual BA meeting that the alliance was unlikely to be operational until next summer even if it finally obtained approval from UK, US and European regulators.

If the start-up is delayed until next summer it will mean that it will have taken BA and AA two years to get the alliance off the ground.

When the alliance was unveiled in June last year the intention was to launch combined transatlantic services by spring this year. Regulatory hurdles subsequently forced the two airlines to delay the launch until this November. Now it appears unlikely that the alliance will formally commence until the 1998 summer timetable is introduced next May.

Mr Ayling said he was disappointed that approval had taken so long but was still hopeful of reaching an acceptable deal with regulators.

The UK's Office of Fair Trading has called on BA and AA to give up 168 runway slots -equivalent to12 round trips a week - in return for approving the alliance. But US regulators have recommended that the two airlines be required to relinquish double that number of slots. The European Competition Commissioner Karel Van Miert is thought to have pressed for a similar concession.

Mr Ayling said that 168 slots was a large number and if BA and AA gave up that many it would make the alliance difficult to proceed with from a commercial standpoint.