British Airways, USAir deal supported by Pena

March 13, 1993|By New York Times News Service

WASHINGTON -- Transportation Secretary Federico F. Pena has recommended approval of a $300 million investment by British Airways PLC in USAir Group Inc., aviation specialists said yesterday.

The White House has not made a final decision, they said, but was believed to be leaning toward approval.

The proposed deal has caused considerable controversy over the extent to which foreign airlines should be allowed to own and control American carriers, which have lost $10 billion in the last three years. The $300 million would give British Airways 19.9 percent of USAir's voting stock.

The infusion of capital would be a boon to USAir, whose domestic markets would be linked with British Airways' international destinations under a system called "code sharing."

The deal has been opposed by the financially strongest American carriers -- American Airlines, United Airlines and Delta Air Lines. They complain it would constitute unfair competition, unless they were allowed greater access to the British market.

The three airlines say that the $300 million is merely a down payment, and that British Airways contemplates two more payments of $200 million each that would give it control of USAir.

Richard Mintz, a Transportation Department spokesman, would not confirm whether Mr. Pena had recommended approval.

Mr. Mintz would say only that the department had "submitted a list of recommendations to the White House, and hopefully we'll make a decision shortly. Some options we thought were more feasible than others."

But Texas Gov. Ann Richards, the headquarters state of American Airlines, has received word from the White House that the deal will probably be approved, the governor's press secretary, Bill Cyrer, said.

Clark Onstad, a Washington aviation lawyer who was a former airline executive and chief counsel of the Federal Aviation Administration in the Carter administration, said the opposing airlines were positioning themselves for the next battle: to open markets in Britain and other countries to American carriers.

In a joint statement yesterday, the three opposing airlines said they would be "bitterly disappointed" if the deal was approved "without first securing equivalent economic opportunities for all U.S. airlines."

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