BA-AA tie up could slot into place

THERE ARE signs that the US government is taking a friendlier attitude towards the planned tie-up of British Airways with American Airlines. The US justice department recommended that BA give up 126 valuable Heathrow landing slots a week in return for approval of the alliance.

But this is barely a third of the total it was told to sacrifice in 1998, when the two carriers last tried to link up. That total killed the plan.

The change shows how far regulators, at least in Washington, have at last woken up to the industry crisis and the emergence of other big alliances. JP Morgan analyst Chris Avery said: 'This is a number that BA could at least begin to work with.'

BA insists it should not sacrifice any slots, but many suspect it would be prepared to give up 100. The US transport department, not justice, will make the American government's final ruling early next year.

'Washington is shuffling in the direction of an open skies agreement,' said Avery. 'The big roadblock is still Brussels.' The European Union, which helped scupper the first plan in 1998, is likely to give its thoughts by February.

BA has 37% of Heathrow's slots. Linking with American would give it 39%. Germany's Lufthansa has 62% of Frankfurt's slots, Air France 56% at Paris, KLM 54% at Amsterdam. Brussels and Washington approved their alliances with big US carriers.