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Airline deal under a cloud
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October 23, 1998: 5:34 a.m. ET
British Airways denies report that it plans to scale back alliance with AMR.
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LONDON (CNNfn) - British Airways is denying a report that its long-delayed alliance between British Airways and American Airlines is in trouble.
A BA spokeswoman told CNNfn, "We have absolutely no plans to scale back our airline alliance. We are eager to see its implementation next year, following approval on satisfactory regulatory terms."
The Financial Times reported Friday that U.S. regulators have put on hold their scrutiny of the deal, believing British Airways has scaled back its ambitions and is no longer interested in a full alliance with American.
The move comes shortly after the failure of talks to set up a new "open skies" agreement between the U.K. and the U.S.
Washington has made such an agreement a condition of approval for the BA/AA alliance.
According to the newspaper, U.S. regulators now believe BA would prefer a looser alliance with AA, requiring less stringent anti-trust approval.
This could consist of a code-sharing agreement, allowing the two companies to sell seats on each other's flights. It would not allow them to set joint fares.
The BA-AA deal was first announced in June 1996, and has yet to receive regulatory clearance from U.K. authorities.
BA stock dropped 10 pence or 2.5 percent on the report, but it bounced back on BA's denial, up 3 pence at 401. 
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