US hints at banning BA stake

NEW YORK - Federico Pena, the new US Transportation Secretary, has hinted strongly that Washington will force British Airways to abandon the 20 per cent stake it took in USAir in January, writes Larry Black.

In an interview in USA Today, Mr Pena said the dollars 300m ( pounds 214m) investment would give BA greater access to the US than rival American carriers enjoy in the UK. He endorsed a demand by America's three big airlines that the treaty governing transatlantic travel be renegotiated.

'The current relationship is not a level playing field, and we've got to change it,' he said.

BA's three US rivals, United, American and Delta, have lobbied hard to have Washington veto the USAir deal, forcing the UK carrier to withdraw an earlier dollars 750m deal by convincing Mr Pena's predecessor that it hurt US interests.

The White House announced earlier this week that a decision on the stake would come by today, but US airline sources said Mr Pena's staff were deadlocked on the issue and a ruling was unlikely before next week.

The sources said it was unclear whether Mr Pena would veto the deal outright or merely place strict limits on BA's ability to exploit its new tie with USAir.