Seen in the FT today and a predictable decision.
BA shelves OpenSkies expansion
By Kevin Done, Aerospace Correspondent, in Hyderabad
Published: January 22 2009 13:17 | Last updated: January 22 2009 22:26
British Airways has postponed plans for further expansion of its venture to operate direct services between leading airports in continental Europe and North America, bypassing its global hub at London Heathrow.
It will instead seek to sell the aircraft in its mainline fleet that had previously been earmarked for transfer to its OpenSkies subsidiary, which began flying last year.
Willie Walsh, chief executive, said a letter of intent had been signed with another carrier to sell for cash 10 or 11 of its current fleet of 15 Boeing 757-200s, leaving only the existing four 757s, which are already operated by OpenSkies.
Dale Moss, managing director of OpenSkies and a former sales director of BA, said in July the airline intended to have a fleet of seven 757s in operation by the end of 2009, including the two acquired by means of its takeover last summer of L’Avion, the French all-business class carrier.
The OpenSkies subsidiary began to fly between Paris Orly and New York JFK in June and a second route between Amsterdam and JFK in October.
In the tough economic environment, with falling demand for air travel and weak sales to premium passengers, OpenSkies has struggled. It has performed below budget, with volumes and average fare levels failing to meet targets.
BA group operating profits have fallen from last year’s record level to only slightly more than breakeven in the current financial year to the end of March, forcing it to restructure.
It had already postponed the transfer of a fifth aircraft to OpenSkies last October. It has chosen to make preserving cash a priority in the current crisis.
BA had been considering launching OpenSkies services between several other destinations and New York including Brussels, Barcelona, Frankfurt and Milan.
Copyright The Financial Times Limited 2009