USAir to get more British Airways cash

April 27, 1993|By Suzanne Wooton | Suzanne Wooton,Staff Writer

British Airways PLC announced yesterday that it would purchase an additional $86.3 million of USAir Group stock, giving the Arlington, Va.-based airline its second major infusion of cash since its alliance in January with the profitable British carrier.

In connection with USAir Group's planned sale of 10 million shares of common stock, British Airways said it would exercise its option to purchase a new series of preferred stock.

"British Airways' decision to exercise its right is confirmation of its confidence in the future of USAir and the value of the new alliance," said Marge Vodopia, a spokeswoman for British Airways in New York.

In March, the Clinton administration let stand a $300 million investment by British Airways in USAir and approved for one year the jointoperations of direct flights to London out of Baltimore-Washington International Airport and three other U.S. airports.

USAir is the largest carrier at BWI, handling more than half its 27,000 daily passengers.

Made in January, the $300 million payment was the first of a three-stage investment British Airways plans to make in USAir, which offers daily flights from Baltimore to Gatwick Airport near London.

Over the next five years, British Airways wants to invest an additional $450 million in USAir. That, however, will depend on congressional action and renegotiation of the U.S.-British aviation agreement.

The alliance between British Airways and USAir was bitterly opposed by the big three American airlines -- United, Delta and American -- which complained that it gave British Air unlimited access to the U.S. skies without opening British air routes to U.S. carriers.

It also greatly strengthened USAir's ability to compete with other domestic carriers.

"We're not too pleased with this investment either, but it may be the only additional amount they can invest for a year," Bobby Harper, a spokesman for Delta in Atlanta, said about the planned stock purchase by British Airways.

British Airways, however, can buy an additional $12.9 million in preferred stock if the underwriter of the 10 million shares exercises an overallotment option and brings the total number issued to 11.5 million.

According to USAir spokesman Dave Shipley, the planned stock purchase would allow British Airways to maintain its current 24.6 percent holding in USAir Group's equity. The purchase would not be counted against the $450 million British Airways ultimately hopes to invest, because that option was part of the original agreement in January.

Over the past four years, USAir has lost more than $2 billion. In the first quarter of this year, it lost $61 million, compared with $110 million for the same period last year. Mr. Shipley would not comment on how the airline would use the forthcoming cash.

Unlike other major airlines, USAir has not announced furloughs this year or postponed the purchase of new aircraft. In fact, USAir began making those kinds of cuts in 1990.

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