BA opponents accused of protectionism

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THE ROW over British Airways' investment in USAir escalated yesterday when John MacGregor, Secretary of State for Transport, criticised the 'protectionism' of the three US airlines opposing the deal.

Mr MacGregor said the agreement, under which BA has paid dollars 300m for a 20 per cent stake in the US carrier, was fully consistent with American aviation laws.

Meanwhile, President Bill Clinton yesterday told workers at a Boeing assembly plant near Seattle that he would insist on strict enforcement of a 1992 agreement limiting European subsidies for Airbus, the European aircraft manufacturer in which Britain has a 20 per cent stake.

'My trade ambassador Mickey Kantor will be closely monitoring the agreement . . . made finally last year with regard to limiting European subsidies for Airbus. We'll be seeking tough new discipline on those subsidies,' he said.

Last Friday Boeing announced that it was making 28,000 employees - 20 per cent of its workforce - redundant.

Mr Clinton said he believed many of the job losses would not have been necessary 'had it not been for the dollars 26bn that the United States stood by and let Europe plough into Airbus over the last several years'.

Airbus has denied it was in any way to blame for the Boeing lay- offs and has warned it is ready to respond if the US takes action to block sales of its jets in America. 'They sell more aircraft in Europe than they buy, so you can easily imagine the concrete answer we could give,' a spokesman said.

Both subjects are expected to be on the agenda when John Major flies to the US today for direct talks with Mr Clinton.

Referring to the campaign to block the BA-USAir deal by the American, United and Delta carriers, Mr MacGregor said: 'There do seem to be protectionist tendencies among the US airlines.

'But the deal fits absolutely within US law and there is no reason whatsoever why it shouldn't be approved.'

The minister's most direct criticism was reserved for Bob Crandall, the chairman of American Airlines, who said last week that the BA-USAir deal should be allowed only if there was also a worldwide multilateral open-skies agreement that would allow US airlines unfettered access to the UK market.

Mr MacGregor said: 'Mr Crandall knows perfectly well that is not a realistic stance.

'He also knows that the UK has been the leading advocate of open skies within the European Community.'

Mr MacGregor hopes to fly to the US at the end of April to resume air liberalisation talks with the new Transportation Secretary, Federico Pena.

The previous talks collapsed before Christmas after the Bush administration refused to approve BA's initial agreement with USAir unless it was accompanied by the opening up of Heathrow.