BA to drop regional UK flights

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British Airways is planning to abandon its provincial UK services in a move which reflects the airline's increasing focus on Heathrow.

British Airways is planning to abandon its provincial UK services in a move which reflects the airline's increasing focus on Heathrow.

BA's intention to wind down its services to and from Manchester and Birmingham is a key plank of the revolution being orchestrated by its new chief executive, Rod Eddington. He is keen to extricate BA from its short-haul services which currently cost the airline losses of about £300m a year. BA sources expect to be informed of the future of the airline's provincial hubs in the next few weeks.

Though the plans are thought to have been put in place, Mr Eddington is unlikely to make great play of them tomorrow when he reveals the airline's second-quarter figures. The centrepiece of the results, which are likely to see BA return to profit, is expected to be a statement about the future of Go, its low-cost carrier.

He is expected to reveal plans for Go to be granted its independence either through a management buy-out or, more likely, via a stock market flotation. Barbara Cassani, Go's chief executive, is known to be eager to escape the shackles of ownership by BA.

Although BA's Manchester operations are understood to be in the red, its Birmingham services do make a profit. Nevertheless, Mr Edding- ton is content to leave these routes to other airlines in favour of focusing on its far more profitable operations in and out of Heathrow.

"BA finds it extremely hard to do short-hop services around the regions because its cost structure is too high," said one industry source.

Mr Eddington has already begun to streamline BA's services. Last month, he announced a number of changes to the airline's schedules, that included a reduction of its loss-making services in and out of Gatwick. Routes to be given the chop included those to Ljubljana in Slovenia and Salzburg in Austria, and services between Heathrow and Jersey.

At the time, Mr Eddington said: "Our drive to return to proper levels of profitability is moving up a gear. We must properly address poorly performing routes."

Although BA's flight from the provinces will raise concerns about job losses, Mr Eddington has so far proved himself more adept at managing staff morale than his predecessor, Robert Ayling. It is unlikely that BA would be forced to lay off any of its pilots since the airline is expected to face a shortage of them in the next few years due to the imminent retirement of many of its captains.

There is also a question mark over the future of BA's relationship with Gatwick. There is speculation that BA will jettison its One World alliance with American Airlines in favour of a tie-up with Air France. That would open up the possibility of BA using Paris as its second major hub after Heathrow, suggesting that Gatwick could become marginalised.

Analysts remain non-committal over the likely success of a possible flotation of Go. BA does not reveal separate results for the no-frills airline and many observers believe that it has failed to meet its target of breaking into the black by the end of this year. However, Mr Eddington will have an opportunity to gauge the appetite of investors for low-cost flyers later this month when easyJet, its Luton-based rival, comes to the stock market. Initial indications suggest that easyJet could be given a valuation of as much as £750m when its flotation takes place.

Analysts expect BA's second quarter results to show an improvement in performance thanks to Mr Eddington's focus on more profitable routes.