BA in talks for US 'co-operation'

BA had a merger attempt with American Airlines rejected.

British Airways has confirmed it is discussing "co-operating" with two of its largest US rivals, American Airlines and Continental Airlines.

Reports suggest that BA is eyeing an alliance with the two US companies, which may allow it to streamline costs.

BA already works with American Airlines under the One World arrangement, which lets member airlines expand routes and share airport facilities.

Competition authorities rejected a previous effort to merge the airlines.

However the easing of restrictions under the Open Skies has created new opportunities for trans-Atlantic air services, analysts said.

Last month, Delta Air Lines and Northwest Airlines were given permission to broaden their alliance with Air France-KLM and Alitalia.

Continental currently has a codeshare arrangement with BA's rival Virgin Atlantic.

Observers say that this would almost certainly be in jeopardy were Continental to strengthen its ties with BA.

Airlines are struggling with running costs, including high fuel prices.

From May 2, BA is increasing fuel surcharges on long and short-haul flights.