Bermuda II should be dumped... Immediately. It is an overly protective agreement from an age where free competition was frowned upon, or at least from an age when it was agreed free competion might not be a good thing. The sooner the UK and UK have an open skies agreement, the better.
The issue of LHR slots is TOTALLY seperate from Bermuda II, but an attempt to link the two issues has been made by some airlines:
(a) Airlines already in LHR, such as BA, VS, AA and UA are are anxious to protect their position at LHR and thus linking LHR slots to Bermuda II suits them, because without slots being freed up politically Bermuda II is unlikely to be dropped. Retaining two carriers from each country suits the existing encumbants very nicely.
(b) Airlines not in LHR who want to be there are anxious to ensure slots and Bermuda II are linked too, as these airlines perceive that dropping Bermuda II without freeing up slots at LHR would potentially make BA, VS, AA and UA even more powerful, which is not true - BA, VS, AA and UA would have to compete for additional slots just as would any new entrant.
I'll say again - Bermuda II should be dumped forthwith, with no preconditions. Any airline that wished to serve transatlantic would then be free to do so, subject to finding slots at LHR. A few years ago, BD had to find slots for their UK domestic and European ops, and they did despite pundits saying it would be impossible. It wasn't impossible, they just had to work at it. VS had to find slots for their transatlantic ops, and in the same way they did. Slots are not impossible to come by and a lot of airlines are hiding behind the slots issue as a way to prevent Bermuda II being dropped. Shame.