Chris Jasper/LONDON

British Airways may be edging towards the sale of loss-making French regional subsidiary Air Liberté to SAirGroup carrier AOM, while pressing ahead with plans to enter the Italian regional market, possibly through a move for Meridiana.

French newspaper reports say BA and SAir have been discussing an Air Liberté-AOM merger since mid-1999 and are near a deal. One possible scenario would see the pair enter into a codesharing alliance and combine frequent-flier programmes as a prelude to a merger.

BA says it is no longer prepared to support loss-making operations, and, although it will not comment on its plans for Air Liberté, a source close to BA suggests that a sale to AOM is "one possibility".

Air Liberté and AOM are based at Paris Orly Airport, where together they would control 40% of slots, while the former's short-haul network would complement the latter's long-haul services. AOM has 11 McDonnell Douglas DC-10-30s (leasing three to Cubana) and two Airbus A340-200s, but is to standardise on A340s over the next two years. Its -200s will be replaced in October by two new 322-seat -300s from SAir leasing arm Flightlease, with six more to follow.

BA's new commercial chief, Carl Michel, says the carrier is meanwhile considering a bid for Italian regional Meridiana, which has been put up for sale by the Aga Khan. Michel, former chief executive of German subsidiary Deutsche BA, says that such a move would not preclude the launch of BA's planned National Jets Italia (NJI), with hubs in Sicily and Rome.

"Meridiana is based in Sardinia and is strong in Florence, whereas NJI would initially operate in southern Italy, so it is not impossible that the two would fit together," he says. Air France has also declared an interest in Meridiana.

The Italian regional is studying options to replace its 17 Boeing MD-82/83s and four British Aerospace 146s. It aims to phase out the MD-80 series from 2003.

Source: Flight International