BA to sell French subsidiary for £50m

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British Airways is set to announce the £50m sale of its loss-making French subsidiary, Air Liberté, to a consortium linked to the Swiss national airline Swissair.

Confirmation of the sale could come as early as today following a meeting of the Air Liberté board last night.

BA has been conducting exclusive negotiations with the French-owned investment group Taitbout Antibes since April. Taitbout is owned by the French investment houses Marine Wendel and Alpha, and also has stakes in two other French domestic airlines, AOM and Air Littoral, both 49 per cent owned by Swissair's parent SAir Group. The plan is to link all three French carriers once the Air Liberté sale is complete.

BA reported a 7.5 per cent increase in business and first class passenger numbers in April, the 10th successive month that premium traffic levels have risen year-on-year. Passenger load factor - the proportion of seats filled on each aircraft - rose 3.7 points to 72.6 per cent, the highest April figure in five years. The increase in premium traffic for April was particularly notable given that the month included the Easter holidays, traditionally a period when airlines carry more leisure than business traffic.

Despite the improvement, BA is expected to announce a full-year loss of about £250m, its first loss since privatisation, when it reports annual results on 23 May. The losses stem from overcapacity on North Atlantic routes and heavy discounting.

BA is cutting capacity by 12 per cent over the three years to concentrate on more lucrative business passengers.

Shares in BA closed 16p, nearly 5 per cent, down at 313p.