British Midland going global

BRITISH MIDLAND, the European short-haul carrier, is within days of sealing a deal to join a global airline alliance.

The choice of partner, which analysts say will underpin the company's drive to strengthen its hand in a rapidly consolidating industry, appears to be a straight fight between the Star Alliance and the Delta Airlines- Air France grouping.

Air France's chief financial officer, Philippe Calavia, said yesterday that his firm had been invited by British Midland to invest in the UK- based carrier.

"We are in contact with British Midland, but we are not the only ones," Mr Calavia said.

A spokesman for British Midland, which is led by chairman Sir Michael Bishop, said: "We are in discussions with a number of major airline groupings.... A decision is imminent."

Membership of an alliance would enable British Midland to promote its services more widely and help trim costs. The airline last year established a code-sharing agreement with Air France, one of 19 that it holds. Code- sharing allows airlines to carry each other's passengers on connecting services and to share computer booking codes. British Midland, which has ambitions to be a long-haul player, also said it would announce a transatlantic initiative today aimed at business travellers.

The company controls about 200 landing slots at Heathrow, about 14 per cent of the daily total. The operations make it the second-largest slot- holder at the airport, behind British Airways.

The Star Alliance, which include Lufthansa, Air Canada,Thai International and Scandinavian Airline System, has also been pushing for a tie-up with British Midland, in which SAS holds a 40 per cent stake. Analysts said the stake may have to be sold if British Midland sealed a deal with Air France-Delta.

Virgin Atlantic has long suggested a link-up with British Midland to bolster its challenge against BA. But a Virgin spokesman said that although a deal with British Midland had "long been a dream of Richard [Branson's] ... we haven't been pursuing it within recent weeks."

Dutch carrier KLM has also been connected with British Midland over the past few weeks.