The deal will allow BA to feed transatlantic passengers on to 96 domestic destinations served through America West's hub airport at Phoenix, Arizona.
In return America West, the US's ninth-largest carrier, will have access to BA's worldwide network of 194 scheduled destinations in 84 countries.
The agreement is similar to the alliance that BA has with USAir except that BA has no plans to take an equity stake in America West. It has paid $400m (pounds 263m) for a 24.6 per cent stake in USAir.
Under a code-share agreement with America West, BA plans, subject to US government approval, to start services to 11 destinations in the western US including Las Vegas, San Jose, Tuscon, Alburquerque, El Paso, Lon Bech and Ontario via Phoenix.
BA will launch a daily service from Gatwick to Phoenix on 1 July. Passengers will be able to book through tickets to destination beyond Phoenix as if if were a single flight, using the same flight code.
Passengers on each airline will also be eligible to earn and redeem mileage benefits on the other's frequent flyer programme.
America West flew 12.5 million passengers in the first nine months of last year and for the whole of 1995 made pre-tax profit of $119m. It has 5,500 employees and a fleet of 72 aircraft and also has hubs in Las Vegas and Ohio.
The code-share agreement with USAir covers 71 destinations and is estimated to add about $150m a year to BA's bottom line through extra passenger revenues and cost savings.
But the equity stake itself has proved a poor investment. Last year BA was forced to write down the value of the investment by a half and it declined to take up it rights in a new preference share issue.
BA said there was no question of taking an equity stake in America West at the present.Reuse content