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British Airways hasconfirmed it is in talks with US competitors to co-operate more closely. It is exploring opportunities for co-operation with American Airlines and Continental Airlines.

When Continental broke off merger talks with United Airlines the carrier's chairman and CEO Larry Kellner indicated that a change of airline alliance may be on the cards to see the airline through the current tough economic times, and it was considering alternatives to SkyTeam to evaluate which major global alliance will be best for Continental over the long term. This was seen as a leap towards oneworld.

BA and American are already oneworld partners, but if Continental joined them it will create a powerful transatlantic triumvirate paving the way for co-operation in the form of more aligned schedules, code-sharing and joint frequent flier programmes. Such an alliance would be highly competitive in the new Open Skies market.

There is media speculation that a full merger between BA and American is back on the cards, but their previous attempts were thwarted by regulators demanding too much in return in the form of relinquished Heathrow slots. However, later this month meetings will take place regarding Phase II of Open Skies which could allow European carriers to buy US counterparts - currently they are not permitted to do. A decision on this must be reached by 2010.