Despite all the 'commercial considerations' being highlighted by some here, I must say, bumping a First pax is a quick and sure way to destroy the BA business.
I would suggest the typical First pax is the type of person who either has a very high level position, or has a high disposable income. In either scenario, they are most certainly the type of client you do not want to lose. I still cannot believe BA bump from First, truly astonished.
As regards profitability, it is quite possible to make pretty much any business profitable in the short term, by sacrificing long established relationships built up over many years with premium clients, due to reductions in staffing and service levels. Short term, the managers at BA get their bonuses, shareholders get a return. Long term, in two years or less, BA will lose it's key premium customer base to competitors who are only too happy to oblige.
By this time of course, said BA managers will have 'jumped ship' to yet another business of which they have little understanding.
rsoman, your posts are like something from the MOL handbook. Just because it works at the budget end, it really doesn't mean it will work at BA, as anyone with any level of business acumen could tell you.