BA in dogfight with rival over bid for regional French airline

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The Independent Online
British Airways last night disclosed it was considering launching a bid for the French regional airline Air Liberte and said it had asked Brussels to block a rival offer from another French carrier.

Bob Ayling, BA's chief executive, wrote to the EC Transport Commissioner, Neil Kinnock, and the Competition Commissioner, Karel van Miert, calling on them to block the bid for Air Liberte by the rival French carrier AOM, claiming it would contravene European state aid rules.

BA said a takeover by AOM would amount to an illegal use of state aid because the carrier is a subsidiary of ailing French bank Credit Lyonnais. The bank last year received a FFr45bn (pounds 5.56bn) capital injection from its government and is seeking further state aid.

Air Liberte went into receivership last week with total debts of FFr1.5bn. AOM is up for sale as a part of the restructuring of Credit Lyonnais. BA said that a condition of the Credit Lyonnais rescue was that it would not be allowed to add to its liabilities. On this basis, a bid for Air Liberte would be a breach of that condition because of the debts it is carrying.

BA, which owns the rival French regional carrier TAT, has made enquiries about buying Air Liberte. According to French media reports, however, the French authorities are preparing to sanction a sale of Air Liberte in order to prevent valuable take-off and landing slots at Paris Orly airport from falling into foreign hands.