LONDON (CNNfn) - British Airways admitted Friday that it is scaling back its plans for a full-scale alliance with American Airlines.
After earlier denying a report in Friday's Financial Times of London that regulatory obstacles were forcing it to dramatically scale back its plans, BA was forced concede it would be pressing for a looser alliance.
"What we want is an alliance with American Airlines (AMR) to be phased in over four or five years," said a spokesman.
Earlier Friday a company spokeswoman had said: "We have absolutely no plans to put the alliance on hold, or scale back."
The European Commission has demanded the two airlines give up 267 weekly slots free of charge at Heathrow and Gatwick airports as the price for allowing the airlines to coordinate fares and schedules.
BA's spokesman said the company was prepared to give up some of its slots, but not overnight.
But he said he was "not sure" whether it would give up 267 even over five years. The airline is still thought to be unlikely to concede so much ground.
"We have always said we are not going to do a dumb deal," said the spokesman.
"Yes, we want an alliance with American Airlines. The flying consumer thinks, acts and travels globally. But the terms put forward by the EU are not acceptable to us from a commercial perspective."
The spokesman said economic conditions had changed since the deal with AA was drawn up two years ago.
Gradual market liberalization would disappoint U.S. carriers which hope to win more slots at Heathrow.
The U.K. and U.S. governments have not yet ruled on the deal. But talks to set up a new "open skies" agreement between the U.K. and the U.S. collapsed recently.