American may share with ally of USAir British Airways deal is unlikely to hurt Va. firm, analysts say

June 11, 1996|By Abbe Gluck | Abbe Gluck,SUN STAFF

If American Airlines and British Airways announce a plan to combine some of their resources today, airline industry analysts say it's not necessarily bad news for USAir Group Inc.

According to published reports, American and British Airways will share their marketing, sell seats on each other's flights, and intertwine their frequent flier programs. The deal is scheduled to be formally announced today in New York by American's chief executive officer, Robert L. Crandall.

All three airlines declined comment yesterday.

Arlington, Va.-based USAir handles nearly half the daily passengers at Baltimore-Washington International Airport. British Airways owns 24.6 percent of USAir's stock.

"The type of traffic feed that American and USAir would provide to BA is, in most instances, complementary as opposed to competitive," said Samuel C. Buttrick an analyst at PaineWebber Group Inc. in New York.

Buttrick stressed that while American provides the strength of both a long-haul carrier and a carrier with strong service to Latin America, USAir's strengths lie in the shorter haul and East Coast markets.

"BA is not forsaking USAir for American," he said.

Brian Harris, an analyst at Lehman Brothers in New York, also said he didn't think British Airways would sell its stock in USAir after joining forces with American.

"I'd be shocked if British Airways were to get out of their USAir lines," he said.

Harris stressed USAir's success on the Eastern Seaboard -- success that has made the carrier the nation's fifth largest.

Another New York-based analyst, who requested that his name be withheld, said USAir would have no trouble finding another investor in the unlikely event British Airways sold its stake.

Calling USAir a "very attractive partner because of its trans-Atlantic feed and its huge share of the East Coast market," the analyst said British Airways gets a lot more out of its stake in USAir than USAir gets from British Airways.

While American and USAir serve different segments of the airline market, analysts could not say the same for American and British Airways. Since both carriers run strong East Coast-to-London routes, the analysts said getting government approval may be more difficult.

But Buttrick of PaineWebber said an alliance would be an attempt to balance the power gained by a similar link between United Airlines and Lufthansa.

Pub Date: 6/11/96

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