AA/BA Regulatory Announcement

British Airways PLC
25 January 2002



                      BRITISH AIRWAYS/AMERICAN AIRLINES STATEMENT

                               REGULATORY PRICE TOO HIGH

        In response to the US Department of Transportation's regulatory
        conditions for the proposed alliance between British Airways and
        American Airlines Rod Eddington, British Airways' Chief Executive and
        Don Carty, Chairman and Chief Executive, American Airlines, said:

        'We will not do this deal at this price. We made it clear from the start
        that we would not conclude the deal if the regulatory price was too
        high. Regrettably this has proved to be the case.

        'It is a disappointment for both airlines, shareholders, and for the
        many staff who have worked extremely hard to ensure that the deal would
        be a real success for the flying public.

        'The conditions laid down by the US government do not make sense for
        either company. We will not acquiesce to unrealistic, and in our view,
        unnecessary demands. For us, the price is just not right.

        'We simply sought to have the same commercial advantages and deliver the
        same consumer benefits that rival airline alliances and their passengers
        already enjoy. Consumers will now be denied the substantial range of
        benefits that would have arisen from a closer alliance between our two
        great airlines.'

        American Airlines remains British Airways' partner of choice across the
        Atlantic. Both airlines pledged to continue to develop the bilateral
        relationships within the oneworldTM alliance, the grouping is as strong
        as ever and oneworld is still a central plank of the alliance strategy.

        British Airways and American Airlines will continue to give passengers
        access to each other's networks and will endeavour to deliver as much of
        the customer proposition as they can within the existing legal
        boundaries.

                                         -ends-


        January 25, 2002                                    014/LV/02




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