Air France, Delta to target Heathrow-U.S. routes

PARIS (Reuters) - Air France-KLM (AIRF.PA) and Delta Air Lines Inc (DAL.N) will team up on routes linking major U.S. cities and London's Heathrow airport in a direct challenge to rival British Airways (BAY.L).

With a view to the Open Skies pact set to liberalise transatlantic rules next March, the two airlines will form a joint venture, said analysts who attended an Air France investor conference on Monday.

"The opportunity that we have with Air France across the transatlantic could create a very powerful entity," Delta Chief Executive Richard Anderson said on a conference call.

Combining Delta's U.S. presence with Air France's Europe position "could create an enormous amount of value," he said, declining to comment on details.

Air France declined to comment ahead of a formal announcement set for Wednesday.

The two carriers hope to extend their cooperation to include Northwest Airlines Corp NWA.N and Continental Airlines Inc (CAL.N) once they win multi-party, anti-trust immunity.

The aim is to tap into sprawling U.S. domestic networks held by the three U.S. carriers, and link these with Europe's busiest airport.

Big corporate customer accounts held by the three U.S. carriers will help fill seats and could mean a loss of lucrative business class customers for British Airways, analysts said.

Business travellers crossing the north Atlantic are BA's biggest source of profits.