British Airways pays £49m to offload loss-making Deutsche BA

British Airways finally disposed of its loss-making German subsidiary Deutsche BA yesterday in a deal which will cost it a further £49m over the next 12 months.

BA, which has lost about £280m on DBA since launching the airline 11 years ago, has agreed to sell the business to the German entrepreneur Hans Rudolf Wöhrl, the founder of the German charter airline Eurowings and a former DBA board member.

Mr Wöhrl's company, Intro Verwaltungsgesellschaft, will pay a symbolic €1 (72p) for DBA, while BA will invest up to £25m into the airline and underwrite its fleet of aircraft for a year at a further cost of £2m a month.

In return, BA will receive 25 per cent of DBA's future profits or 25 per cent of any profit Intro makes if it sells the airline before June 2006.

The £49m cost of the deal to BA compares with the £32m profit it would have netted had easyJet not pulled out of a previous option to buy Deutsche BA. Nevertheless, Roger Maynard, BA's director of investments and joint ventures, maintained: "This deal is a sensible one in the current climate."

The sale of DBA will end BA's exposure in Germany, where it has been losing between €30m and €40m a year since launching DBA in 1992 despite increasingly aggressive cost-cutting measures.

It also marks the disposal of BA's last remaining non-core business apart from the London Eye. Since Rod Eddington took over as chief executive, BA has sold the no-frills airline Go and its French domestic airline Air Liberté to concentrate on the main UK full-service airline.

It still retains minority stakes in Qantas and the Spanish airline Iberia but these are both considered to be profitable parts of the core BA business.

DBA serves seven German cities and four international routes with a fleet of 16 Boeing 737 aircraft and employs 800 staff. It has been hampered since day one by fierce price competition from the national airline Lufthansa and Germany's rigid labour laws - the main reasons why easyJet backed out of buying DBA in the end.

Mr Maynard said it would be "very much business as usual" for DBA's customers and staff as there would be no changes to its flights as a result of the change in ownership.

However, industry observers said that Mr Wöhrl's strategy would probably be to knock DBA into shape, bring it into profit and then sell the airline on. He has wide experience of the aviation industry having been the founder of NFD, the forerunner of Eurowings, and a DBA board member from 1994 to 2000. His current business Intro is a specialist investment company and aviation consultancy.