USAIR CUTS DEAL IN BRITAIN

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, January 22, 1993                   TAG: 9301220273
SECTION: BUSINESS                    PAGE: A-5   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium
USAIR CUTS DEAL IN BRITAIN
USAir announced Thursday that British Airways had agreed to invest $300 million in the American carrier in a deal that would provide both airlines more access to passengers in Europe and the United States.
The deal requires approval from the Transportation Department. A larger version was withdrawn last month in the face of opposition by the Bush administration, but executives of both airlines expressed optimism that the Clinton administration would approve the smaller agreement.
Approved Thursday by both carriers' boards of directors, the pact would give British Airways "feeder" traffic from dozens of American cities served by Arlington-based USAir, while funneling passengers from Britain to USAir.
The British Airways stake will provide the financially strapped U.S. carrier with badly needed cash, while limiting British Airways initially to 19.9 percent of USAir voting stock. Options would permit the British company to buy another 5.5 percent in voting stock eventually.
A $750 million deal between the two airlines was aborted in December after other U.S. carriers objected that it would have given British Airways a 44 percent stake in USAir and veto power over major USAir business decisions.
U.S. law limits foreign investment in American carriers to 25 percent and prohibits foreign control of U.S. airlines.
The new agreement does provide British Airways with three seats on the 16-member USAir board, but USAir said they would have "no governance or super-majority voting arrangements."
The Big Three U.S. airlines - American, Delta and United - opposed the initial deal, fearing it would give British Airways a foothold on their turf without their getting additional landing rights in Britain.
United Chairman Stephen M. Wolf said the announcement changes nothing. "British Airways' significant investment in a U.S. carrier must be carefully scrutinized . . . and only sanctioned when the U.K. government lifts the barriers to competition," he said.

by Bhavesh Jinadra by CNB