US climbdown expected over BA

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The Independent Online
(First Edition)

THE CLINTON administration is today expected to avert the threat of a transatlantic air war with the UK by allowing British Airways to continue its alliance with USAir.

There had been fears that the US would block BA's crucial code-share arrangement with its American partner and renounce the Bermuda 2 agreement on air services between the US and Britain.

Senior US aviation officials told the Independent yesterday, however, that the Transport Secretary, Federico Pena, had decided against renouncing the code-sharing arrangement that permits BA and its US partner to list flights jointly in computerised reservations systems - the principal benefit BA derives from its dollars 400m holding in USAir.

The US will instead extend provisional approval for a limited time - probably three months - to give negotiators yet another chance to draft a new bilateral agreement.

The US climbdown will infuriate American Airlines and Delta Airlines, which have been lobbying the White House to block the BA-USAir alliance unless US airlines are granted more access to Heathrow airport.

The British government had threatened to retaliate if the code-share deal was blocked by cutting US flights to Heathrow from Washington and Chicago. This would almost certainly have provoked further US sanctions against BA and Virgin Atlantic.