USAIR CLOSE TO NEW BRITISH AIRWAYS DEAL

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, January 19, 1993                   TAG: 9301190146
SECTION: BUSINESS                    PAGE: A-5   EDITION: METRO  
SOURCE: The Washington Post
DATELINE:                                 LENGTH: Medium
USAIR CLOSE TO NEW BRITISH AIRWAYS DEAL
USAir is close to agreement with British Airways on a new, $340 million investment in the debt-laden U.S. carrier, according to industry sources and British press reports, but American Airlines moved vigorously Monday to block the deal.
Throwing a political hot potato to the incoming Clinton administration, American said Monday it will urge the president-elect to veto any foreign investment in U.S. airlines until big U.S. carriers such as American get more rights to overseas routes, even if that means rewriting the international agreement governing U.S.-British air travel.
"We will state very clearly to the new administration that we don't think any investment in U.S. carriers should be approved until" a new international agreement is reached "that will assure U.S. carriers of equal footing in the global market place," said Tim Doke, managing director for corporate communications for American.
American's challenge will force the Clinton administration to deal quickly with the sensitive issue of foreign investment in U.S. companies and the relationship between domestic competition and international competitiveness. "It's . . . a dicey time to act on something so full of consequences," said one airline expert.
The new agreement being negotiated between British Air and Arlington, Va.-based USAir would give the British carrier a 20 percent stake and 20 percent voting rights on the USAir board in return for a $340 million investment in the U.S. carrier, said sources familiar with the deal and British press reports.
The two carriers would closely coordinate their operations so that in many ways they would resemble one airline, with passengers from USAir's extensive domestic routes feeding into British Air's international flights and vice versa.
The new agreement would provide USAir with about half the investment and give the British carrier less control over USAir's operations than would have occurred under an earlier British Airways proposal that was shelved after signals that it would be rejected by the Bush administration.
Neither USAir or British Air would comment Monday, but British reports said a deal could be announced Thursday or Friday, just after Clinton takes office.

by Bhavesh Jinadra by CNB