Airlines' alliance ready for take-off

British Airways is looking to reopen talks with US carrier American Airlines with a view to forging a closer alliance between the two groups, it emerged yesterday.

British Airways is looking to reopen talks with US carrier American Airlines with a view to forging a closer alliance between the two groups, it emerged yesterday.

BA's new chief executive Willie Walsh wants to create greater co-operation between the pair on commercial issues such as ticket pricing and flight scheduling.

The move is likely to spark speculation that it could be the first step towards a merger between the two airlines, although BA, which employs about 1,000 people at a call centre and software support unit at Newcastle Business Park, has stressed that it was far too early for such a move to be on its agenda.

Mr Walsh was quoted as saying: "It would initially involve greater co-operation between American and British Airways on commercial issues that we can't do now - pricing, scheduling, flying and so on."

But when asked about a merger, he said: "That is a completely different agenda. The first stage would be to move to a closer relationship."

The airlines already have close ties, with both being members of the Oneworld airline alliance, but two previous attempts to forge closer links have been thwarted by US regulators.

The last attempt ended in January 2002 when US regulators said BA and American would have to give up 254 take-off and landing slots at Heathrow in exchange for immunity from anti-trust action in the US, and BA deemed it was too high a price to pay.

But Walsh is understood to think new talks between the US Government and the EU on the so-called open skies agreement could make such a tie-up possible in future.

Meanwhile, the former Aer Lingus chief executive is focusing on tackling the airline's £1.4bn final-salary pension deficit - one of the biggest among FTSE 100 companies.

He has launched a three-month consultation exercise with staff called Time to Talk, setting out the situation and outlining a number of options the group is considering.

These are thought to include either asking staff to increase the amount they contribute to the fund, increasing the retirement age or reducing the rate at which people accrue benefits, such as basing final payouts on a different proportion of their salary.

More controversially BA is also understood to be looking at giving staff incentives such as pay rises or one-off lump sums in exchange for them agreeing to opt out of the scheme altogether.

Despite BA increasing its own contributions to the fund by £225m last year, the deficit still increased by £205m.

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