Branson warns on BA/AA link-up

LONDON (Reuters) - Virgin Atlantic owner Sir Richard Branson on Sunday wrote to U.S. presidential candidates Barack Obama and John McCain warning that a link-up between British Airways and American Airlines would be anti-competitive.

In the letter, Branson said the proposed alliance would "severely damage competition on major transatlantic routes and leave consumers worse off".

"Airlines everywhere are struggling with the current price of oil, but the solution to their problems should not lie in an anti-competitive agreement which will inevitably lead to less competition and higher fares," he said.

Virgin said, following BA's planned merger with Spanish rival Iberia, BA and American Airlines would have nearly half of all take-off and landing slots at London's Heathrow airport if the alliance takes place.

On Friday, a source familiar with the matter told Reuters that BA plans to lodge an application in the United States this week to seek antitrust immunity for an alliance.

A report in the Sunday Telegraph said Virgin Atlantic is poised to launch a 3 million pounds advertising and lobbying campaign as it attempts to frustrate plans for the alliance.

Meanwhile, the Mail on Sunday reported that BA is ready to surrender its right to hundreds of transatlantic flights in an attempt to win the backing of U.S. authorities for the alliance.

The report says BA will meet U.S. Department of Justice officials this week and offer to give up the flights.

(Reporting by Matthew Scuffham; Editing by Jason Neely)