Airlines campaign to kill USAir-British Airways deal

January 27, 1993|By Knight-Ridder News Service

American, United and Delta airlines are preparing another high-profile campaign to ground the revised alliance between USAir and British Airways.

"Consider it full bore," said Jerry Ray, senior vice president of the Washington-based public relations firm Powell Tate, just before a strategy session late yesterday with the so-called Big Three.

Mr. Ray, whose firm helped the Big Three kill the original alliance proposal, said the campaign this time will focus on fair-trade arguments more than illegal foreign control of a U.S. airline. A position paper they issued yesterday blasted away on both angles.

The Big Three want the Transportation Department to withhold approval of the revised alliance until the British government gives U.S. airlines the same access to British markets that British Air would get to U.S. markets.

Foreign airlines cannot fly U.S. domestic routes. However, British Air proposes to link its trans-Atlantic flights with USAir's domestic flights at cities they commonly serve.

USAir and British Air maintain that market access issues are irrelevant to their alliance.

British Air last week invested $300 million for a 19.9 percent stake in USAir, and has options to invest $450 million more over five years if U.S. restrictions on foreign investment in airlines change. British Air's voting stake, if it exercised those options, would be 32.4 percent. British Air originally planned to invest $750 million at once for a 44 percent stake.

President Clinton said late in last year's campaign that he was "troubled" by the alliance because of the prospect that British Air would effectively control USAir.

British Air withdrew the original proposal Dec. 22 because of clear signs that the Transportation Department, under President Bush, would reject it.

The partners have tried to head off a repeat of that argument by eliminating a provision that would have given British Air veto power over major USAir board decisions.

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