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The head of British Airways PLC (BAIRY) said Tuesday that plans to expand its alliance with Japan Airlines Corp. (JALSQ) through a landmark antitrust application remain on hold while the Asian carrier cements its links with American Airlines.

American, a unit of AMR Corp. (AMR), recently secured immunity to expand its links with JAL on transpacific flights. BA said earlier this year it would seek similar status with JAL for services between the U.K. and Japan in 2011 in what would be the first effort to win immunity on flights between Europe and Asia.

For JAL, the American relationship is of "greater significance" right now, according to BA Chief Executive Willie Walsh, but BA remains happy to discuss a joint application for antitrust immunity if and when JAL is ready. Walsh made the remarks during a luncheon presentation in New York City to discuss BA's first-half performance, reported last week.

BA isn't "overly concerned" about tougher new cargo-screening rules following Friday's discovery of explosives aboard cargo flights, he added, noting cargo is just 8% of BA's business and it doesn't serve Yemen or Somalia, identified as the sources of the threat.

In an interview following remarks and an open question-and-answer session, Walsh said he's "never been critical of Emirates [Airline's] approach to business." Delta Air Lines Inc. (DAL), partner Air France-KLM and other airlines have lately taken to bashing Emirates and other Middle East carriers, alleging subsidies those carriers receive are unfair, a charge they deny.

However, Walsh did say he believes European Union lawmakers are growing perturbed with those airlines' use of so-called export credits loans that give cheap financing for the purchase of new aircraft. The credits were intended to help carriers struggling to find acceptable financing, he said, which is not the case of airlines like Emirates, which reported nearly $1 billion in first-half profits on Monday.

Walsh said "without question" there will be consolidation among European airlines, and reiterated a desire to discuss the purchase of British Midland Airways Ltd., or bmi, if parent Deutsche Lufthansa AG (DLAKY) decides to sell it.

Sweden's SAS, which Lufthansa said Monday it is interested in acquiring, is also in play as a takeover candidate, Walsh said, as is Finland's Finnair PLC. He also pointed to Aer Lingus Group PLC (EIL1.DB), which may be a target after competitor Ryanair Holdings PLC (RYAAY) said Monday it thinks the Irish government will sell its Aer Lingus stake, and TAP Air Portugal. Eastern European carriers are also potential acquisitions, he said.

Walsh said some of the airlines he discussed were attractive to BA and others weren't, but bmi was the only carrier he singled out as a BA target, citing synergies with the fellow U.K. airline. He said "several" airline CEOs have approached him about a deal.

An air-passenger tax hike in the U.K., which went into effect Monday, will have a "significant negative impact on the U.K. economy," Walsh said, and should be scrapped. Harm to companies doing business in or with the U.K. will outweigh any benefit to the government from increased tax revenue.

Walsh also defended frank and controversial remarks made last week by BA Chairman Martin Broughton, who slammed passenger-security demands by the U.S. as "completely redundant," and blasted the U.K. for "kowtowing." Walsh said he was not at the Airport Operators Association conference with Broughton, but said he believed Broughton was "equally critical of Europe" and didn't single out the U.S. Among other gripes, the outspoken Broughton decried the removal of shoes and separate checks of laptops for passengers boarding flights.

-By Maxwell Murphy, Dow Jones Newswires; 212-416-2171; maxwell.murphy@dowjones.com

(Doug Cameron contributed to this article.)