Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.twt.metro From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: USAir's planned link to BA on standby Date: Mon, 26 Oct 92 14:37:03 EST Message-ID: \SE B;METROPOLITAN;MONEY \HD USAir's planned link to BA on standby \BY David Field \CR THE WASHINGTON TIMES As negotiations to forge a new aviation treaty for British and U.S. carriers deadlocked last week, hopes for a speedy ruling on USAir's plan to ally with British Airways have also stalled. But British Airways PLC, one of the world's most profitable airlines, continues to buy airlines, reducing the ranks of its competitors at home in its second acquisition in a month - a sign that BA will go on growing whether or not it gets approval to buy a USAir stake. USAir, meanwhile, posted another deficit and appears unlikely to make money for the year, even though the Arlington-based line has consistently maintained that it is close enough to profitability that it can survive without the $750 million BA cash influx and route alliance they proposed in July. Although treaty negotiations resume tomorrow,, sources said that no real breakthrough can be expected before another session here, planned for Nov. 9. An alliance between USAir and British Airways depends on the treaty breakthrough because the "Big Three" U.S. airlines and other opponents have vowed to sue to block any U.S. approval unlesss they get what they want from London in a new international landing rights treaty. The Big Three - American, Delta and United, allied with Federal Express - say that in 1990, the last time the bilateral treaty was revised, U.S. Transportation and State department authorities gave too many rights to Britain, which awarded them to British Airways, giving its flag carrier unparalleled opportunities. BA, meanwhile, continues to grow. On Friday, it said it had taken over a foundering domestic player, Dan Air, which links London Gatwick Airport with 11 cities from Athens to Zurich. Rapidly growing Gatwick is London's second-biggest airport after Heathrow, the major international connecting hub. On Sept. 24, BA bought a half stake in the No. 2 French airline, TAT, which gave it access to 37 European cities, 32 of them in France. The Dan Air move, under which BA will spend one pound but will also pay off all debts of Dan Air parent Davies & Newman Holdings, is a major step in BA's plan to create a lower cost carrier within its own corporate structure. "This move is the first stage in British Airways' strategy to create a new, low-cost airline," BA said in statement, noting that Dan Air will develop "a major network of short-haul services at Gatwick." The new subsidiary will operate all Dan Air-scheduled Gatwick routes and also will take over the 10 existing British Airways short-haul routes from Gatwick. In another move to operate a lower-cost unit, the airline recently said its British Airways Regional subsidiary will launch flights linking New York and Birmingham, England, and Los Angeles and Manchester, England, as of March 28, 1993. British Airways Regional will also fly the existing British Airways service between New York and Manchester. The moves leave Britain with one strong trans-Atlantic competitor to BA, music millionaire Richard Branson's Virgin Atlantic Airways. Mr. Branson, who negotiated with Dan Air but made no offer, said in a statement that the BA takeover of Dan Air, if approved by British antitrust authorities, would reduce competition dramatically. BA will still compete on British-European routes with British Midlands Airways, which also flies some domestic routes, and with smaller lines. However, BA will have the single largest share of flights from Gatwick and about 40 percent of Heathrow flights. * This article is based in part on wire service reports. This article is copyright 1992 The Washington Times. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM