British Midland seeks Eurostar ticket deal

British Midland, the country's second biggest scheduled airline, is to launch further services to southern Europe this year and forge a ticket agreement with Eurostar to stem the loss of passengers and profits to the Channel tunnel.

Competition from Eurostar train services on routes between London and Paris and Brussels is estimated to have cut British Midland's profits by about a half last year to pounds 4.1m. Traffic levels on Paris alone are down by about 25 per cent.

In a bid to offset the loss of passengers the airline is in talks with London and Continental Railways, the new owners of the UK half of Eurostar, to introduce combined tickets.

This would enable passengers to fly out to Paris in the morning and return by rail in the evening on the same ticket. The arrangement, which British Midland wants to be exclusive, is aimed at the lucrative business travel market.

British Midland's chairman Sir Michael Bishop said that it would launch up to five more routes this year. The most likely addition is a daily service from Heathrow to Rome although Milan, Madrid and Barcelona are also being considered. The airline also applied for licences to Moscow, Budapest, Cairo and Tel Aviv.

Sir Michael was speaking as British Midland's parent company, Airlines of Britain Holdings, reported a big improvement in performance last year with pre-tax profits up from pounds 300,000 to pounds 6.2m and passenger numbers up by 10 per cent to 7.2 million.

The improvement was mainly due to a turnaround by its regional carriers Loganair and Manx Airlines which now operate as franchisees of British Airways and reported a profit of pounds 1.3m compared with losses of pounds 5.1m in 1994.

Sir Michael also confirmed that he had received an approach from Richard Branson about Virgin Atlantic taking a stake in British Midland but no negotiations had taken place.