Karel Van Miert, the EU Competition Commissioner, is expected to brief the Council of Ministers on the conditions he has laid down for allowing the deal to proceed at a meeting next Wednesday. The Commission is expected to give its formal approval at a meeting a week later on 23 March.
Clearance for the BA-AA tie-up will allow London and Washington to complete negotiations on an agreement to liberalise transatlantic air services, even though Brussels ruled yesterday that such bilateral deals contravene EU law.
The Commission sent a "reasoned opinion" to eight member states, including Britain, saying that the bilateral agreements infringed EU law. The member states have two months to respond, after which Neil Kinnock, the EU Transport Commissioner, is likely to take them to the European Court of Justice. The other member states are Germany, Sweden, Austria, Belgium, Denmark, Finland and Luxembourg.
Mr Kinnock has been seeking wider powers to negotiate EU-wide agreements with the US, arguing that the present bilateral deals give US carriers access to national markets in Europe without allowing European carriers equal access to the domestic American market.
A spokesman for the UK government last night rejected the EU's ruling, saying: "We are confident we are legally entitled to negotiate bilaterally with the US and we are continuing with those negotiations."
Although no formal talks have been held for almost a year now, informal discussions between officials have taken place in the US in the last few weeks.
Outlook, page 25