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BA Relaxes Foreign Ownership Rules

Sun Jun 24, 2001 11:54 pm

Well we're all opening up aren't we!

I wonder if Branson wants a piece of it?

BA opens door to foreign tie-up

by Matthew Fletcher, Mail on Sunday

BRITISH airways is to relax its rules on foreign ownership of its shares – clearing the way for a deal with a European partner.

BA will next month ask shareholders for permission to allow the airline to be majority-owned by investors within the EU. It has taken the decision ahead of the conclusion, expected next year, of a court case in the European Court of Justice that could give the European commission the right to negotiate vital aviation agreements on behalf of member states. If the EC wins, BA may have to get backing from Brussels rather than Westminster‘s to form an alliance w ith American Airlines, its preferred partner.

The move will be seen as the latest sign of chief executive Rod Eddington‘s determination to strike a deal with another airline, even if this means diluting its British ownership. Changing the ownership structure would ease the way for a merger with Dutch carrier KLM.

Eddington thinks European airlines may have to give up their flag-carrier status to speed consolidation and compete better globally. But his move will surprise observers who thought he wanted to trade on BA‘s Britishness.

In the short term, BA Expects to stay at least 50% British-owned – meaning it will still be covered by existing aviation rights negotiated by the Government. But it faces having to negotiate with Brussels for the right to fly worldwide if the EC wins its case to take over pan-European aviation. The EC is suing eight countries that insist they can sign bilateral ‘open skies‘ agreements with the US.

© Associated Newspapers Ltd., 24 June 2001
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