BA ready to come back for USAir

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The Independent Online
BRITISH AIRWAYS is preparing to re-enter the bidding for USAir by offering to take a smaller equity and voting stake in the American carrier.

The revised offer, expected to be announced within the next four to six weeks, follows the refusal by the Bush administration to approve BA's planned dollars 750m purchase of a 44 per cent equity stake and 21 per cent voting stake.

Under the renewed offer BA is likely to bid substantially less than dollars 750m for an equity stake with attached voting rights giving it up to 20 per cent of USAir, America's fourth-largest carrier.

BA withdrew from its original bid, tabled in July, just before Christmas after it became clear that the offer would not be cleared by the US authorities.

The tie-up foundered partly because it would have involved loss of American control over USAir and partly because of the failure of Britain and the US to agree a new liberalised treaty on services between the two countries.

However, BA is anxious not to pass up the opportunity to gain a toehold in the US, the world's largest aviation market, accounting for 40 per cent of all air travel movements.

BA will wait until the new Clinton administration has settled in after its inauguration later this month before tabling its revised offer for USAir.

At present non-US citizens are limited to 25 per cent of the voting rights. The UK has offered US airlines unrestricted access to Heathrow once this limit has been lifted to 49 per cent and to all airports on complete dismantling of ownership controls.

Although BA proposed to take only a 21 per cent stake in USAir under its original offer, rival US airlines claimed this would have given it effective veto control because all important board decisions would have required an 80 per cent majority.

Northwest Airlines said it would lay off 1,043 employees from 18 January.

Affected employees include full- and part-time flight attendants, ground services employees and reservations sales agents.