An unrepeatable opportunity to create a British airline to take on the world BA chairman Lord King

Together the companies would control 70% of the UK flight market with a combined annual turnover of nearly �4bn and 46,000 staff.

Both organisations are confident that there would be no need for compulsory redundancies.

The British Caledonian Board - under the chairmanship of Adam Thomson - has already approved the merger and 40% of BCal shares have been pledged to BA.

BA shares rose by 10p to 170p as soon as the plans were announced.

British Aerospace would benefit as BA would pledge their �1bn budget for new aircraft to the airbuses currently used exclusively by BCal.

In parliament government trade spokesperson Kenneth Clarke told MPs he knew about the proposal a week ago.

Mr Clarke said the Director General of The Office of Fair Trading, Sir Gordon Borrie, would examine the case and report back to trade secretary Lord Young in the next few weeks.

Last year BCal reported losses of �25m following the disappearance of �6m of South American business after the Falklands War and when the US bombing of Tripoli last year closed off the lucrative route to Libya.

Founded as a charter airline in 1961, BCal expanded in 1970 when it merged with British United Airways.

The two airlines currently share 13 destinations, but Bcal would provide BA with access to 20 new routes and dominance at Gatwick as well as Heathrow airport.

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