City wants BA to cut short-haul

Brett Arends12 April 2012

BRING back the old British Overseas Airway Corporation, the City says. Investors want BA chief executive Rod Eddington to roll back the years and refocus the group on premium, intercontinental travel where it makes a profit. That sounds like the old BOAC - before the Government merged it with British European Airways 28 years ago.

Eddington admits he plans to slash European routes, where BA is haemorrhaging customers to no-frills rivals. But speculation is that he will cut just 15 routes. BA flies to 71 European cities, including Bilbao, Cork, Pisa and Sofia.

The short-haul operation lost £172m last year, while transatlantic flights made £470m profits. The year before, short-haul lost £310m.

The airline denies that any decisions have been taken. A strategic review has been underway since the autumn. BA will reveal its plans next month.

Analysts say only business routes, or those producing feeder traffic for long-haul flights from Heathrow, should remain. Chris Avery, at JP Morgan, wants BA to focus only on 'major cities'.

Howard Wheeldon, at Prudential-Bache, said: 'They should keep the Frankfurt, Paris, Brussels, Zurich, Madrid and Rome routes. The others are questionable.' He predicts a £1bn-plus rights issue later this year to shore up BA's balance sheet.

The awaited coo-peration deal with KLM, allowing costs to be cut by sharing Middle Eastern routes, has been delayed until at least next week. Meanwhile, rival British Midland is launching a new no-frills airline.

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