Branson asks Obama to stop BA-AA merger

Sir Richard Branson, the owner of Virgin Atlantic, has written to American presidential candidates Barack Obama and John McCain, warning that a link-up between British Airways and American Airlines would be anti-competitive.

In a flurry of PR activity, Sir Richard is also reported to be ready to launch a £3m advertising campaign to scupper the deal. The Virgin chief's campaign comes as arch rival BA plans to lodge an application in the United States this week to seek antitrust immunity for an alliance.

BA is also said to be ready to surrender its right to hundreds of transatlantic flights to try to win the backing of the American authorities, which vetoed the last attempt at a BA-AA deal in 2002, on competition grounds. Then the American regulators wanted BA to give up 16 pairs of take-off and landing slots at London's Heathrow, a price BA deemed too high. BA will meet United States Department of Justice officials this week and offer to give up the flights.

In his letter to Senators Obama and McCain, Sir Richard says that the proposed alliance would mean "BA/AA would have a combination of high frequencies and a transatlantic network that could not be replicated by any other airline/alliance, and which would make it impossible for other carriers to compete for time-sensitive corporate or business travellers".

It would, he said, "severely damage competition on major transatlantic routes and leave consumers worse off". He went on: "Airlines everywhere are struggling with the current price of oil, but the solution to their problems should not lie in an anti-competitive agreement which will inevitably lead to less competition and higher fares."

Virgin said that, following BA's planned merger with the Spanish flag carrier Iberia, BA and American Airlines would have nearly half of all take-off and landing slots at Heathrow airport if the complete alliance is achieved.

Sources close to BA responded: "There's nothing to stop Virgin or any other airline competing on routes if they believe there is not enough competition.

"If we submit this application and if it's approved, there will be nine airlines operating across the Atlantic and Virgin will be the only one without antitrust immunity.

"They have got to recognise that the whole competitive climate has changed instead of just making the same arguments they did eight years ago."