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. Last Updated: 07/27/2016

BA Guarded on Status of U.S. Link

LONDON -- British Airways PLC on Thursday refused to confirm a report that it and American Airlines had given up on plans to form a global aviation alliance after a three-year battle.

The Financial Times said the decision had been taken after the airlines were informed that the U.S. Transport Department would dismiss their application for immunity from antitrust proceedings.

A BA spokeswoman declined to comment directly on the report. "What we're saying is that we're still in negotiations with the U.K. regulatory authorities," she said.

BA has said it has left it to American Airlines to deal with the U.S. regulators.

"That is a matter for the Transportation Department, not a matter for us," the company said.

An American Airlines spokes-woman said she could not comment immediately on the report.

BA shares initially traded almost 2 percent higher at 408 pence ($6.50) and were up some 4 pence at 404 pence early Thursday in a lower FTSE 100 index of leading stocks.

Dealers said the initial positive reaction could be caused by relief that BA may not have to give up coveted takeoff and landing slots in Britain as part of the negotiations.

"The logic may be that they are not going to have to give up any slots," said one dealer. "But I don't think the news is quite as good as the share price is suggesting ... I would say it's getting a bit ahead of events."

The proposed linkup, which falls just short of a merger, has long hampered British-U.S. efforts to revise a 1991 aviation accord.

Britain has tied access for U.S. airlines to London's main Heathrow Airport to antitrust clearance for the alliance, but apparently cannot agree with BA on how many takeoff and landing slots it must give up to increase competition at Heathrow.

Under the current aviation pact known as Bermuda II, only British Airways, Virgin Atlantic Airways, American Airlines and UAL Corp's United Airlines are allowed to use Heathrow for transatlantic service.

Britain is prepared to increase foreign access to the airport, but is demanding greater access to the U.S. domestic market - currently closed to foreign carriers - as a quid pro quo.