British Airways and American try to get transatlantic tie-up off the ground

By MICHAEL HARRISON

LONDON - Rod Eddington, the chief executive of British Airways, is to meet the new US Transportation Secretary, Norman Mineta, today to gauge the support of the Bush administration for a far-reaching alliance with American Airlines.

Don Carty, Mr Eddington's opposite number at American, will also attend the meeting, which the two carriers hope will kickstart the process of granting anti-trust immunity to their transatlantic tie-up.

Separately, BA yesterday moved to deny fresh speculation that it had rekindled £5bn merger talks with the Dutch national airline KLM that broke off in September. Spokesmen for both airlines confirmed that Mr Eddington had a meeting with Leo van Wijk, head of KLM, but said they had discussed general European airline issues.

BA and American have been attempting to forge an alliance, which would involve pooling services and co-ordinating fares and schedules on transatlantic routes, for the past four years. The last attempt to broker a deal collapsed a year ago after the US and UK governments failed to agree on the terms of an accompanying "open skies" deal to let more carriers into Heathrow.

Mr Carty has close ties with President Bush which stretch back to the days when he was Governor of Texas and has been extremely bullish recently about the prospects of gaining support for a BA alliance. Last week Mr Carty said he was confident that the Bush administration would approve a broad alliance with BA, adding: "I see no reason ... why it can't happen very quickly. We've said publicly that we would like to see our partnership with BA develop into a more fulsome partnership. We are quite optimistic - very much."

BA, however, is much more cautious about achieving a breakthrough and has characterised the meeting with Mr Mineta as a "courtesy call" by Mr Eddington who has never met the new US Transportation Secretary. "Frankly, we are very cautious because we know what happened last time," said one source. "This is very much an exploratory meeting. We need guidance as to whether it is worth moving forward with a proposal and, if so, how."

BA and American are the two leading members of the OneWorld alliance. However, they are not allowed to code-share on North Atlantic flights and do not even have access to each other's frequent flyer schemes.

They will argue that the growing presence of the Star Alliance at Heathrow justifies giving anti-trust immunity to their tie-up. The Star Alliance, which is led by Lufthansa and United and counts BMI British Midland as one of its members, has 27 per cent of the take-off and landing slots at Heathrow. BA and other members of OneWorld have 45 per cent.

- INDEPENDENT