ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, June 11, 1996 TAG: 9606110067
SECTION: BUSINESS PAGE: BUSINESS EDITION: METRO
DATELINE: WASHINGTON
SOURCE: The Washington Post
The future of USAir Group Inc. could be dramatically altered by a proposed alliance between American Airlines Inc. and British Airways PLC that will be announced today.
American and British Air plan to announce a marketing agreement that could allow the two carriers to dominate the skies over the North Atlantic with more than half the flights between the United States and Britain.
The deal, which requires government approval on both sides of the Atlantic, could put new pressure on USAir Chairman Stephen M. Wolf to sell the carrier. British Air holds a 24.6 percent stake in USAir.
The agreement is likely to set off a scramble among competing airlines. USAir, because of its dominant role as a feeder airline to trans-Atlantic hubs in the East, could become a coveted part of any realignment.
Darryl Jenkins, president of the Aviation Foundation and a professor at George Washington University, said that as a result of the deal between British Air and American, ``the whole trans-Atlantic complexion will change.''
Wolf already has served notice that the airline might be for sale, telling stockholders last month USAir cannot survive unless it grows through an alliance or merger. ``We have to get bigger. It would be my strong preference that we remain a stand-alone carrier, but that's an open question,'' Wolf said.
USAir is about to begin contract negotiations with its three major unions in an effort to trim hundreds of millions of dollars a year from its labor costs, which could make it a much more desirable merger partner. A union official involved in the talks predicted the British Air-American agreement would put Wolf in a stronger bargaining position with other airlines seeking an alliance with USAir.
A United Airlines official said recently that the British Air-American deal could rekindle United's interest in USAir. United considered a merger with USAir last year, but backed away because of the objections of its employee owners to taking on new debt.
A United spokeswoman said Monday the airline favored alliances with foreign carriers, but was counting on the federal government to make sure the British Air-American plan was part of a broader agreement to open British airports to other U.S. airlines. United already has an agreement with Lufthansa as part of an ``open skies'' agreement between the United States and Germany.
USAir officials said Monday they would not comment on the possible impact of a deal between British Air and American until they had seen it. A source familiar with the agreement said American has made USAir an offer on a cooperative frequent-flier program.
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