British Airways is looking at merger opportunities that could create a transatlantic super-carrier in response to a plan by Delta and Air France to shake up this lucrative market.

Aviation sources believe that BA is in talks with Sir Michael Bishop, controlling shareholder of bmi, to buy the British carrier. BA is also believed to be considering a renewed attempt to merge with American Airlines, despite two previous approaches being struck down by competition regulators.

The rumoured talks come as airlines prepare for the liberalisation of air travel between the United States and Europe next March. The new rules will allow any airline to fly anywhere, ending decades of bilateral restrictions that limited access to favoured carriers. Delta, which is based in Atlanta, and Air France-KLM announced yesterday that they would merge their transatlantic operations to cut costs.

As part of the deal, Delta will get three of Air France’s Heathrow slots to offer new services to New York and Atlanta. Slots at Heathrow, Europe’s transatlantic gateway, are extremely rare and American carriers are seeking ways to infiltrate the market before the start of open skies. In response, BA is thought to want to strengthen its already dominant position at Heathrow and is looking at bmi and American Airlines as partners.

Sir Michael Bishop has said he is considering options for his 51 per cent stake in bmi and is widely expected to sell within the next year. The airline could cost BA £750 million.

However, BA would have to convince competition authorities that the takeover posed no threat, as the combined company would control more than half of all Heathrow flights. If BA were then to merge with American Airlines it would control about 66 per cent of the Heathrow to US trade with the opportunity to offer many more flights. It would also have access to an extensive regional network in North America.

A BA spokesman said: “We have never said we are in talks with bmi. American is already a One World partner and in the long-term we would like a closer relationship with them.” Bmi was unavailable for comment.

Steve Ridgway, chief executive of Virgin Atlantic, yesterday vowed to fight any attempt by BA to increase its dominance at Heathrow by creating a super-carrier. “Such a deal would be bad for competition, bad for consumers and bad for the British economy,” he said. Analysts said that Mr Ridgway’s comments indicated how advanced rumours about BA’s merger intentions had become.

Andrew Fitchie, aviation analyst at Collins Stewart, said: “I can see the logic in BA doing this. It would face regulatory hurdles but the Delta-Air France deal will set a precedent.”

The Delta-Air France deal will initially cover 19 flights a day from the US to London and France and will then be extended to all European destinations.

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