BA plans to retain USAir ties

RUSSELL HOTTEN

British Airways said yesterday it had no plans to cut ties with USAir, the struggling airline in which it has a 25 per cent stake. Bob Ayling, who took over as BA's chief executive on Monday, said the relationship was improving all the time.

But there was no comment on whether BA would lift its investment in USAir. BA has until the end of January to decide whether to raise its stake, though there has been talk it may try to delay a decision.

The news came as BA reached a new peak of 488p, up 18p, due to a profits upgrade from stockbrokers UBS, and positive comment from analysts at BZW.

Last year Seth Scofield, USAir's outgoing chairman, said the company was standing on its own two feet and did not need an injection of cash from BA.

Mr Ayling said: "We have no plans to sever links with USAir. We're working very well with them. The strength of that relationship improves all the time."

USAir talked last year to American Airlines and United Airlines about a possible alliance or merger but discussions failed. However, BA is strongly rumoured be holding separate talks with American Airlines about a code- sharing arrangement and other links.

Meanwhile,Virgin, Richard Branson's airline group, yesterday firmly denied speculation that it was close to forging a link with Airtours. Shares in Airtours rose on rumours the two companies plan joint holiday deals to the United States. Last year Virgin was tipped as close to a deal with Airtours' rival, First Choice. Virgin said yesterday that there was no truth in the suggestion. "Our package holidays growth is linked to the growth in our airlines business," a spokesman said.

Also yesterday, new figures from the Association of European Airlines showed that European airlines carried 7.7 per cent more passengers in November compared with the same month in 1994.

Separately, it announced that Herbert Bammer, head of Austrian Airlines, will be the AEA chairman for 1996. He succeeds Luxair president Roger Sietzen. Mr Bammer said he would continue the AEA's drive to push national governments to end the fragmentation of Europe's airline industry.