ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, July 31, 1996 TAG: 9607310040
SECTION: BUSINESS PAGE: B8 EDITION: METRO
DATELINE: LONDON
SOURCE: ASSOCIATED PRESS
USAir Group on Tuesday lashed out at its partner British Airways, claiming the carrier's plan to join forces with American Airlines amounts to two-timing and wants British Airways out of its board room.
USAir asked a U.S. court in New York to order British Airways to sell its 24 percent stake in the airline and pull its representatives off USAir's board of directors.
The Arlington, Va.-based airline complained that British Airways has used its relationship with USAir to keep it out of key markets.
The lawsuit puts USAir firmly on the side of airlines that want regulators to quash the British Airways-American Airlines deal.
USAir said British Airways broke the terms of their alliance when it sought out a new and bigger partnership with American Airlines. USAir wants to ``remedy what we see as wrong with the relationship,'' spokesman Richard Weintraub said.
British Airways said it was caught off-guard by the complaint, ``so it is difficult for us to comment.''
But British Airways disputed charges that it had violated the terms of its 1993 deal with USAir and reiterated without elaboration its contention that the deal with American could help ``strengthen USAir's position.''
American, also named as a defendant, said it was ``astonished and mystified'' but would have no further comment until it has studied the lawsuit filed in New York.
USAir said it wants unspecified damages from American for interfering in its deal with British Air.
How USAir would fit into the new alliance has been a question ever since British Air and American announced they want to combine their services and share profits. They want to operate essentially as one airline - though they claim they are not merging because they are exchanging no ownership stakes and will maintain separate brand names.
Under the British Air agreement with USAir, BA picked up U.S. passengers from USAir's hubs and USAir got overseas passengers from British Airways - with the airlines giving their connecting services the same flight numbers.
When USAir tied the knot with British Airways, it unloaded valuable routes between the United States and London and redeployed aircraft and employees, USAir says in its lawsuit.
USAir now says British Airways ``failed to act in good faith and breached its fiduciary duty to USAir as a joint venture partner.''
USAir hopes to win legal rulings that could fix whatever damage a British Airways-American deal might inflict, presumably by gaining new trans-Atlantic routes or prime-time takeoff and landing slots at congested international airports.
USAir said the British Airways-American alliance would restrain competition and monopolize crucial air routes. Other carriers, including Virgin Atlantic and its U.S. partner Delta Air Lines, have voiced the same concern, noting that British Airways and American would control 60 percent of the traffic between the two nations.
British Airways and American insist their deal would boost competition when viewed against a backdrop of many global alliances taking place, such as the link-up between United Airlines and Lufthansa.
Earlier Tuesday, a parliamentary committee in Britain recommended that the British Airways-American deal go forward, but suggested that access to London's Heathrow Airport be opened to more U.S. competitors.
But three members of the House of Commons Transport Select Committee failed by just one vote in their call for a full investigation of the deal by Britain's Monopolies and Mergers Commission. The Office of Fair Trading is studying the matter and could order a probe by monopoly regulators.
Despite the lawsuit, USAir and British Airways promised business as usual in their current alliance.
``Customers will see no difference whatsoever,'' Weintraub said. ``We have the greatest respect for BA. This is a business issue that must be resolved.''
LENGTH: Medium: 76 linesby CNB