BA, American set for talks

June 11, 2001
Web posted at: 1041 GMT

LONDON (CNN) -- The CEOs of British Airways and American Airlines meet U.S. Secretary of Transportation Norman Mineta Monday about boosting their alliance.

BA Chief Executive Rod Eddington and his counterpart Don Carty, who are linked as the leading members of the Oneworld global airline alliance, are due to meet Mineta in Washington.

The two carriers have been frustrated in their attempts to form a North Atlantic joint venture, allowing them to share profit and revenue on transatlantic flights, amid UK-U.S. wrangling over "open skies" policy.

BA's Eddington told CNN last month that the company was looking at ways to "deepen" its relationship with American, the world's biggest airline.

Britain and the U.S. have a pact dating back to 1977, which means that only two airlines from each nation may fly transatlantic routes to and from Europe's busiest airport at Heathrow, west London.

BA (BA-) and American has refused to give up 300 prized take-off and landing slots at Heathrow, a key hub for flights between Europe and North America.

Europe's second-largest airline and AMR Corp's (AMR: Research, Estimates) American Airlines argue that the business climate in the industry has changed since they first floated plans to combine their Atlantic routes. 

The Star Alliance, led by Deutsche Lufthansa and UAL Corp's United Airlines, now control about 27 percent of slots at Heathrow.

Washington and London have been in talks for some years to open up the market to more competition.

Ray Neidl, analyst for ABN Amro, told CNN that despite current talks, he doesn't think either airline will be willing to make the compromises necessary to win regulatory agreement between the two countries.

"BA is very happy with it's higher yielding service in the North Atlantic, and American is also very strong there," he said. "Unless they get exactly what they want, I don't see it happening anytime soon. What they have now is not the full integration that KLM and Northwest Airlines (NWAC: Research, Estimates) have, but they can live with it."

The U.S. government threated to block a proposed merger of BA and KLM Royal Dutch Airlines last year unless Britain and the U.S. reached an agreement to stimulate competition on the tightly controlled routes between the two countries.

KLM on Sunday quashed reports that it had renewed talks with BA that could see them merging to create the world's third-largest airline, saying they were in talks about "alternative forms of cooperation," acknowledging that a merger in the current industry environment was not possible.

KLM's chief executive Leo van Wijk told CNN earlier this year that the company expects there will be "between three to five global airlines in the next few years," meaning "Europe's 20 flag-carriers would have to consolidate."

		Want the full story? Search for free Company Info...
		Enter Company Name:-

BA and KLM deny new merger negotiations - Jun. 10, 2001
BA and American in talks on joint venture - Jun. 6, 2001
BA jets back into profit
British Airways

Note: Pages will open in a new browser window

External sites are not endorsed by CNN Interactive.