Battle of the Airlines: Apology 'will not damage hopes of stake in USAir'

BRITISH AIRWAYS' apology to Virgin Atlantic is unlikely to damage its anticipated bid for a stake in USAir, despite Richard Branson's suggestions to the contrary, US aviation officials say.

BA is expected to renew its offer to buy a substantial stake in America's sixth-largest airline after withdrawing its original dollars 750m ( pounds 497m) bid shortly before Christmas in the face of American opposition.

But following BA's admission of anti-competitive tactics on Monday, Mr Branson said the deal was now in jeopardy, particularly if he decided to press his complaint in the United States, where many of the alleged 'dirty tricks' are said to have occurred.

Virgin officials point out that BA delayed a scheduled court appearance in the case last October, apparently to avoid giving its US competitors ammunition in their campaign to get regulators to veto the USAir deal. They also point out that Washington initiated an anti-trust investigation of British Airways' tactics a decade ago, then at the request of Sir Freddie Laker, Mr Branson's predecessor in discount transatlantic air travel.

Mr Branson, who has called a two-week 'cooling off period' to gauge BA's reaction, has three options if he decides to pursue the issue in the US: requesting a criminal anti-trust investigation by the US Justice Department; seeking a private, civil anti-trust ruling against BA, which would award treble damages; or registering a complaint with the US Department of Transportation (DoT).

But aviation lawyers and officials, including many who opposed BA's first bid for a USAir stake, said they doubted whether the airline's admission would have any bearing on its reception by US regulators, even if Virgin was able to win a criminal anti-trust ruling. Even the Washington lobbying firm that led the attack on BA's bid last autumn said the new offer was again likely to be judged on foreign ownership and control criteria, rather than UK competition issues or 'any political or personal mud-slinging between British Airways and Richard Branson'.

'These are two very separate matters,' said Norman Sandler, a spokesman for the group, which was financed by American, United and Delta Airlines, BA's main competitors in the transatlantic market.

Daniel Kasper, a civil aviation expert based in Boston, said: 'US authorities deal routinely with anti-trust issues among US carriers, and this sort of thing just won't come up in the DoT hearing. The character and fitness of British Airways or its management is just not an issue here.' Mr Kasper doubts whether US Justice Department prosecutors would even be willing to consider a criminal investigation of what is essentially a dispute between two UK carriers that has already been settled in Britain.

The investigation of Sir Freddie's allegations, which was halted after a personal request from Margaret Thatcher to President Reagan, involved the practices of US airlines as well as BA, he said.

BA's American competitors are unlikely to try to brand the airline as criminal in the US, given their own record on anti-competitive practices at home, according to Robert Joedicke, an analyst with the Shearson Lehman brokerage in New York. 'They all do it, and they're not about to start throwing stones,' he said.