BA chief attacks US government for United rescue

Rod Eddington, the chief executive of British Airways, yesterday admitted that the bankruptcy of United Airlines could make life tougher for BA as he launched a swingeing attack on the US government's handling of aviation.

Mr Eddington said United's chapter 11 bankruptcy filing had given it protection against its creditors. With its financial obligations substantially reduced, he said, United would "therefore be able to compete more aggressively".

There have been fears that United, which is the world's second largest airline, could cut the price of transatlantic fares in an attempt to bring in more cash. This could be painful for BA and Virgin Atlantic, which rely heavily on flights to the US.

In an interview with the Wall Street Journal, Mr Eddington complained that the Bush administration had provided massive state subsidies to US airlines since September 11, while European carriers had been left to their own devices.

He questioned whether aid from Washington was justified, saying: "I don't know if that is the best way to use taxpayers' funds, to be frank."

Details began to emerge yesterday of United's survival strategy. At a meeting with employees at Washington's Dulles airport, United's chairman Glenn Tilton revealed that he was planning to start a low-cost carrier next year to compete with South West Airlines.

United is desperate to slim down its cost base, having lost $4bn (£2.5bn) in two years. The airline benefited last year from a US government aid package for airlines but went bust after the government refused to guarantee another $1.8bn of loans.

Meanwhile, BA revealed it had changed an order of new aircraft, to reflect its streamlining program. The airline is to buy ten Airbus A321 planes, each with 195 seats, instead of 15 smaller aircraft - although the total value of the order is largely unchanged.