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BA, American Airlines merger talk reignites - reports

10-Oct-2005

LONDON (XFNews) - The possibility of a merger between British Airways PLC and the US' biggest carrier AMR Corp's American Airlines was revived this weekend, as newspapers claimed that talks have been held between the British flag carrier's new chief executive and his US counterpart.

In an interview with the Observer, Willie Walsh, who took over as chief executive of BA last week, said he wants to forge a closer commercial partnership with AA.

He wants to deepen ties by coordinating the airlines' pricing, scheduling and flight patterns, which the paper said would be the first step towards a full merger.

Previous attempts between the two groups to build closer ties have been blocked by US regulators and conditions that would have made any deal unprofitable.

Walsh said last week that any merger was out of the question without regulatory reform and an 'open skies' deal being forged between Europe and the US. He believes that is achievable within 18 months.

Meanwhile, The Financial Mail reported that Walsh has met Gerard Arpey, AA's chairman and chief executive, on a number of occasions in America over the past five months, and already re-opened merger talks.

Walsh insisted that both men are keen on a merger, the Mail reported, which would create a group capable of dominating the North Atlantic route.

Separately, the Sunday Times reported that BA is drawing up radical plans to tackle its 1.4 bln stg pension deficit. Staff may be asked to increase their contributions, accept lower payouts or take cash incentives or pay rises in return for opting out of the final-salary scheme.

The paper said Walsh would not elaborate on the plans, but said the deficit had to be dealt with once and for all.

He told The Business workers will be canvassed for their views.


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