Brussels to press for more concessions from BA

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The Independent Online
British Airways' hopes of sealing its long-awaited alliance with American Airlines were dealt a further blow yesterday when it emerged that the European Commission was likely to call for further concessions from the two companies this week.

Karel Van Miert, the Competiton Commissioner, flew to London yesterday morning for a private meeting with Margaret Beckett, President of the Board of Trade to discuss the alliance. A spokesman for Mr Van Miert said details of the EC's investigation could be released as early as tomorrow.

The spokesman declined to comment on growing speculation that the EC will ask the two carriers to hive off a larger number of lucrative runway slots at Heathrow Airport than the figure of 168 provisionally proposed by the Office of Fair Trading. The EC probe has run in parallel with the OFT, which has yet to hand its final conclusions to the DTI. In January Mr Van Miert made clear his deep concerns about the alliance on competition in the transatlantic air market.

The alliance, which would involve the two carriers pooling revenues and coordinating flight times, has aroused huge criticism from rival US carriers who have restricted access to London airports. It would give BA and American some 60 per cent of flights between the UK and US, entrenching the UK airline's already dominant position at Heathrow.

Mr Van Miert is understood to have made direct contact with BA yesterday afternoon, requesting a meeting with its chief executive, Bob Ayling, to discuss the Commission's concerns about the alliance. No date has yet been set for the talks.

These cover both the number of slots that BA and American should surrender and whether they should be allowed to sell the slots. Mr Van Miert has been locked in dispute for months with Neil Kinnock, the EC Transport Commissioner over the principle of slot trading.

A spokeswoman for the transport commissioner said Mr Kinnock intended to issue proposals legitimising trading next month, though Mr Van Miert is apparently still opposed to the idea. BA has insisted it must be allowed to receive compensation for any slots divested.

A BA spokesman said it welcomed the chance to put its views to Mr Van Miert. "We are pleased that we will have the opportunity we have long sort to face up to the Commission's concerns because we believe we have the arguments to persuade them of the benefits the alliance will bring."

Suggestions that the Commission might insist on tougher concessions from BA and American as the price for allowing the deal to proceed left BA shares 18p lower at 718p. In the last two days they have fallen by more than 5 per cent.

Meanwhile, BA yesterday continued to unravel its relationship with USAirways, its former US partner airline. US Airways bought back about a quarter of BA's 24.6 per cent stake in the carrier for $126.2m (pounds 79m). The deal leaves BA with about 14.5 per cent of US Airways. BA paid $400m (pounds 250m) for its original stake in 1993.