British Airways is expected to forge an alliance with Continental Airlines after admitting yesterday that it was exploring what it called opportunities for cooperation with the US carrier as well as American Airlines, its present oneworld partner.

Discussions are not thought to include any plans for a merger because foreign ownership rules of US airlines would prevent such a move. However, if the carriers successfully applied for immunity from antitrust regulators, this would allow them to liaise more closely over fares and frequent-flyer programmes and to coordinate their schedules. BA and American Airlines have sought antitrust immunity twice, in 1997 and 2001, but were hindered by regulators that would approve their application only if the two airlines disposed of some of their valuable landing slots at Heathrow.

In a brief statement yesterday, BA said: “British Airways is exploring opportunities for cooperation with American Airlines and Continental Airlines.” A spokeswoman refused to provide further details.

BA and American Airlines are partners in the oneworld global alliance, which brings together ten of the world’s airlines. Talks may involve Continental joining this group.

Speculation increased on Sunday that Continental, which is a member of a smaller rival alliance called SkyTeam, would seek a partnership with American Airlines and BA, after talks ended with United Airlines about a potential merger. At the time Continental said that it would stay independent for the time being but would continue to review potential alliances and membership of SkyTeam.

Sir Richard Branson, president of Virgin Atlantic, said that his company would “fight tooth and nail to ensure that regulators say no way” to a three-way tie-up. Continental and American Airlines could not be reached for comment.

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