Word: usair
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...proposed British Airways-USAir linkup, the most controversial of them all, is seen by its U.S. partner as a move into the big leagues. After a decade of rapid expansion, USAir has stalled, losing $973 million since 1989. Says George James, an airline-industry analyst: "Their situation is desperate. They have grown into an airline the size of a global carrier without global routes. If they don't obtain the British Airways deal, they will have to reduce their size back down to that of a regional commuter airline...
This furious expansion has exacted a high cost. Since 1990, U.S. carriers together have lost nearly $7 billion, including almost $1.9 billion in losses accrued by the Big Three. Part of the current frustration is the timing of the British Airways-USAir deal, which comes just as the big domestic carriers were preparing to reap the rewards of surviving the long deregulation bloodbath...
British Airways, one of the largest and most profitable carriers in the world, is taxiing toward unlimited access to U.S. markets vital to the Big Three. USAir, with its concentration of hubs in the eastern U.S., the point of origin for much travel to Europe, can give British Airways crushing new clout in the critical transatlantic market. At the same time, the deal will make USAir a formidable domestic competitor once more. USAir chief executive Seth Schofield conceded, "It's their worst nightmare: competition that they did not expect and do not want. An amicable truce is literally impossible. There...
Britain is a far richer market, but it remains to be seen how much the British will be willing to relax their barriers to U.S. airlines in return for approval of the USAir deal. "To just open up the American airline market, the largest in the world, without extracting any return whatever would be crazy," asserts Neil Monroe, chief spokesman for Delta. The manner in which the question is handled is viewed as a test of U.S. toughness on free trade. The precedent created in the talks with the British may be critical in negotiations later with Germany, France...
Bush Transportation Secretary Andrew Card, who completed a round of talks with British trade officials last month, is eager to consummate the USAir deal before Christmas, while he is still in charge. President-elect Clinton, on the other hand, has reservations about the deal. While he is eager to find a way to help USAir grow stronger (and protect the jobs of its 47,000 workers), he has said he is concerned about the implications for the U.S. airline industry. If negotiations are not completed before he takes office, Clinton is expected to press Britain for "open skies" concessions...