Rivals fight BA's American link-up

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The Independent Online
BRITISH AIRWAYS yesterday encountered the first serious opposition to its link-up with USAir after two rival American airlines urged the US Department of Transportation to block the deal.

American Airlines, the biggest US carrier, said BA's proposed dollars 750m investment in USAir in return for a 44 per cent stake should not be approved unless US airlines were given equal access to the British market.

Meanwhile Delta, the third biggest US carrier, claimed that the link-up should be vetoed on the grounds that it breached US aviation law. United Airlines is expected to mount objections on similar grounds.

Ronald Allen, Delta's chairman, said the BA-USAir accord 'must be seen for what it is - a foreign carrier cloaked in the protection of one of the most restrictive and anti-competitive international aviation regimes in the world seeking control over a US carrier in violation of our government's current law and policy'.

Robert Crandall, chairman of American Airlines, said in a message to employees that liberalising the access of foreign carriers to US domestic airspace opportunities had to be offset by equivalent opportunities for American carriers.

BA remains confident of winning regulatory approval on the grounds that it will end up with only 21 per cent of the voting rights in USAir. US regulations restrict foreign carriers to a 25 per cent voting stake in US airlines.

But Delta claimed the agreement would give BA 'control over virtually every significant business activity of USAir'.

Although BA's voting rights would be restricted to a maximum of 25 per cent it would have the power to block any major investment decisions taken by USAir and senior executive appointments. Approval for its investment is expected to take at least three months.