American rivals seek ban on USAir stake

BRITISH AIRWAYS' American competitors plan to ask the new US Transportation Secretary to veto BA's revised investment in USAir, arguing that they have no comparable ability to invest in a rival UK carrier.

This emerged last night as BA announced it had paid dollars 300m ( pounds 197m) for a 22 per cent equity and voting stake in USAir with the option to pay a further dollars 450m over the next five years to raise its shareholding to just under 33 per cent. BA will take three seats on a new 16-man board and have a code-sharing agreement with USAir enabling it to plug into its domestic American network.

But, in a new tack in the campaign to win wider access to Heathrow, US airline executives said yesterday BA should not be allowed to buy any stake in a US airline as long as it opposes 'reciprocal opportunities'. One senior executive said that the three big US carriers also plan to raise the Virgin Atlantic scandal with the new Transportation Secretary, Federico Pena, 'not because of the dirty-tricks aspect, but because it reflects what they (BA) think about a second carrier.

'BA has shown it will do anything to make sure a viable second carrier cannot exist (in the UK),' he said. 'As a result, there's no real opportunity for a US carrier to make an equal investment in a secondary British carrier.'

BA said the revised deal did not involve any of the foreign control issues that scuttled its first bid, and that it 'is responsive to policy concerns' of US regulators.

The three big US transatlantic carriers - American, United and Delta - said they expect Mr Pena to be considerably more aggressive than his predecessor in seeking a quid pro quo from Britain.