United threatens to fight British Airways-USAir deal

July 23, 1992|By Journal of Commerce

WASHINGTON -- United Airlines will move to block British Airways' proposal to acquire a $750 million stake in USAir Group if the British government doesn't lift access restrictions on U.S. carriers, a top United official said yesterday.

"Our concerns are the same as" British Airways', said the official, speaking on condition of anonymity. "They want access. We want access. This agreement gives them greater access and gives us nothing in return. If you [the British government] can't deliver this, we won't support the agreement."

A top American Airlines official said his airline would "push to get more concessions" from the British before Dec. 24, the deadline for consummation of the deal.

The United official wouldn't discuss what strategy United might use. But industry veteran L. John Eichner, president of New York consulting firm SH&E, predicted that Chicago-based United would lobby White House Chief of Staff Samuel K. Skinner, a Chicagoan and a supporter of the airline, to lobby the Department of Transportation, which will pass judgment on the deal.

The United official's comments came on the heels of statements Tuesday by a high-ranking U.S. government official that the United States reserves the right to block any foreign investment in U.S. carriers if it finds that country's aviation policies discriminate. The government official said the British market "is not an open market -- far from it."

The USAir-British Air deal calls for British Air to control 44 percent of the equity of USAir and 21 percent of its voting stock. Perhaps more significant, it will allow USAir to feed passengers from its domestic net work onto British Air's international flights.

The agreement, coupled with British Airways' sizable European feeder operations -- about 40 percent of its trans-Atlantic traffic originates in European markets other than London -- would make it the only carrier with feeder access on both sides of the Atlantic, the United official said.

The agreement also calls for British Airways to co-opt USAir's routes linking London's Gatwick Airport with Charlotte, N.C., Philadelphia and Baltimore. The planes would be painted in British Airways' colors and carry its logo, although they would remain USAir's planes and would be flown by USAir crews.

The United official said he expects his airline to protest what it calls an unlawful transfer of route rights.

"These are U.S. routes, and they're being given away," he said.

The United official's comments underscore U.S. carriers anger over what they view as a one-sided relationship with the British and their feeling that the USAir-British Airways agreement gives negotiators the opportunity to redress those perceived imbalances.

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