The two carriers, which are already among the most profitable in the world, are expected to propose a deal that will involve a pooling of resources and profits on traffic between Britain and North America. The airmile programmes of the two airlines would also be linked. But the agreement stops short of an exchange of equity between the companies.
It would represent the latest in a series of code-sharing pacts reached by big airlines as a means of extending their reach around the world without actually having to merge with each other and relinquish their identities. United Airlines and Lufthansa recently consummated such a deal, while Northwest Airlines and KLM have been linked for a few years.
A tie-up between BA and American is likely to face several hurdles, however. Alarm bells will be sounded with government regulators and with other carriers competing across the Atlantic because of the sheer power that would be wielded by the two carriers in combination. Together, they already account for some 58 per cent of traffic between Britain and the US.