One If by Land, Two If by Sea . . .

The encounter this time was far friendlier than at Lexington and Concord. In one of the biggest cross-border deals to date, British Airways agreed to acquire a 44% equity stake in USAir for $750 million. If approved, the transaction will result in the largest airline alliance ever and could accelerate worldwide consolidation of the industry. The most immediate impact, though, will be to rescue the Arlington, Va., carrier from a cloudy financial future. After expanding rapidly in the late 1980s, USAir was blown off course by the economic recession and a slowdown in air travel. It has lost more than $800 million since 1989, including $149 million so far this year.

The main winner will be British Airways, now the world's biggest international carrier. The transaction fulfills its long-held desire to enter the American market, fly into more U.S. cities and pick up more American travelers for its transatlantic flights. Although foreign ownership of American airlines is limited to a 49% stake and 25% of voting stock, European and Asian carriers have rushed to make deals. KLM Royal Dutch bought 20% of Northwest in 1989, and in 1988 Pan Pacific Hoteliers Inc., a subsidiary of Japan Airlines, took a 20% position in Hawaiian Airlines.