The BA LGW expansion creating the "hub without the hubbub" lost BA millions and was axed by Eddington. Every long haul flight moved around the M25 left the yield on the competitor's service from Heathrow. Hence the entire B747-400 fleet was moved to Heathrow and only a small sub fleet of B777s was left to service leisure routes and US routes barred from LHR under Bermuda 2. With Open Skies DFW, IAH and soon ATL moved to LHR.
Also remember that a lot of BA LGW was actually CityFlyer and GB Airways, both of which are now gone. With the removal of the B737-500s the smallest routes will be axed and in the medium term a fleet of ex LHR A319s will be brought in as they are displaced by new A320s from LHR. With fewer and fewer flights the opportunity to outsource passenger handling is now being mooted by I don't think that will happen in this case.
Bottom line is that on leisure short haul, easyJet have a much lower cost base, younger aircraft and are handled by external handling agents. There is no way BA could justify the capital investment in replacing the Euro LGW fleet with new aircraft to compete as the return on investment is negligible.