Sun, Nov 05, 2006
'BA Connect' Is The Cost Of Summer Terror Scare
Conceding that this
past summer's terror scare cost it more than previously thought,
British Airways announced plans to sell its regional carrier BA
Connect.
Many media outlets initially reported the terror plot broken up
in London this past August had a minimal financial impact on
airline operations. New computations at BA suggest the costs were
much higher.
During the tense days following the initial arrests in London
many UK flights were grounded causing world-wide disruptions in BA
operations. BA now estimates the costs at upwards of $150 million.
That's nearly $100 million more than previous reports.
The higher losses prompted BA to sell its regional carrier BA
Connect to Flybe. BA Connect has been hit hard by new security
restrictions on liquids and the size of carry-on baggage.
Short-haul carriers see more carry-on baggage because its customers
are more likely on day or overnight trips rather than extended
stays.
Based in Manchester, BA Connect employs 1,900. The regional lost
nearly $12 million in the first half of the year. BA CEO Willy
Walsh says he doesn't expect the regional will make any profit in
its current form.
Walsh told the Irish Examiner, "Point-to-point regional
operations are not a strategic part of our business and we believe
that such activities are better undertaken by a regional low-cost
airline."
BA didn't share actual numbers on the deal, but says it will
take a 15-percent stake in Flybe.
Flybe is currently 82-percent privately held, but had plans to
go public next year. The airline now says it will defer those plans
for another year or two.
Flybe will double in size following its acquisition of BA
Connect. It will get 35 of BA Connect's 52 routes out of 13 UK
airports -- BA aims to keep services from London City Airport and
its Manchester to New York route.
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