BA warns it may have to cut jobs after Air France granted subsidy

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BRITISH Airways warned yesterday that the European Commission's approval of a pounds 2.3bn state subsidy to loss-making Air France was a threat to routes and jobs.

As the chances of a legal challenge to the subsidy grew, United States airlines added their weight to criticism of the rescue package.

Michael Medlicott, Delta Airline's vice-president Europe, said it was not America's job to protest to the EU, but it could bring pressure at government level.

The combined weight of the French political and business establishment was said to have forced the EU to approve the subsidy.

Europe's main airlines continued informal talks yesterday about whether to launch a joint appeal. A spokesman for one airline said: 'Our lawyers continue to look at the ruling, but it's safe to say there will be some action taken.' BA, Lufthansa and KLM are expected to head a challenge in the courts, and the Government is also considering legal action.

Sir Colin Marshall, BA's chairman, said yesterday: 'What we are going to have to do in British Airways is to tighten our belts in order to compete with this bloated bureaucracy which is going to be allowed to continue in France. It might lead to cutting routes. It might lead to cut jobs as well.'

Sir Michael Bishop, chief executive of British Midland, told the French newspaper La Tribune Defosses that Air France should have been allowed to go bankrupt. The subsidy was almost equal to the total losses by world airlines in 1993.

In the US, Federico Pena, the transportation secretary, said the EU had left the door open for other state-owned carriers to seek subsidies.