British Airways has finally agreed to sever its partnership with USAir, putting its shareholding in the US carrier up for sale and planning to draw the marketing alliance to a close by April.
The news increases pressure on BA to push through its new alliance with American Airlines, which faces a series of crucial decisions in the first quarter of the year as it steers its way through competition approval and the allied US-UK open skies talks - a necessary condition of winning anti-trust immunity for the deal.
USAir has first refusal to buy BA's 24.6% stake, but must make a decision by mid-February. After that, BA would be free to sell the shares on the open market, with the proviso that the sale does not allow any investor to build up a stake of more than 5%in USAir.
BA has invested a total of around $400 million in USAir preference shares since signing up a marketing and codesharing alliance three years ago. The relationship, which had always appeared strained, finally broke down into acrimony when BA signed up the new alliance agreement with American Airlines and USAir replied by launching a lawsuit against its former partner.
Bob Ayling, BA chief executive, denies that the share sale was prompted by the USAir lawsuit, claiming that it would "-clearly be unwise to pursue an alliance with an unwilling partner". He adds that BA's intention is to bring its relationship with USAir "to a close".
USAir has called the decision "an important first step" in its new goal of becoming "an effective, independent competitor" between the USA and London Heathrow.
BA hopes to have an alternative transatlantic arrangement in place by the time the USAir marketing pact is dissolved from 29 March, although prospects of having won approvals for its American alliance by then are remote.
The next milestone in UK approval for the new alliance comes on 10 January, when BA and others must file their responses to an initial ruling by the country's competition watchdog, the Office of Fair Trading (OFT).
The proposal is for BA to give up 168 slots a week at Heathrow, which represents around 90%of the new slots which American would bring to the alliance. Details of exactly how the slots would be selected and distributed have not been released, but they would have to be made available for competitive transatlantic services.
BA now has some 38% of slots at the airport, which on latest figures would represent a total of around 3,700 take-off and landing movements each week. The OFT is expected to make a recommendation within a couple of weeks of receiving the responses. o
BA and American are also in the process of making an official filing with the US Department of Transportation and Justice Department outlining their case for going ahead with the alliance and being granted anti-trust immunity. A decision could take three months or more.
Source: Flight International
