British Airways is mulling a disposal of its OpenSkies subsidiary as it desperately grapples to curb growing losses.
City sources say BA could either wind up or sell its off-shoot, which currently operates flights from Paris and Amsterdam to the US, in a move that highlights the sharp decline in business passengers flying Transatlantic.
Openskies - named after the 2008 treaty that allows EU operators to fly to the US from any European country, not just their country of origin - was launched last summer by chief executive Willie Walsh. He set out a series of ambitions plans that including buying French airline L’Avion last year for £54m.
Walsh was so keen to establish the OpenSkies business that he risked a strike by one of the company’s most powerful unions, the British Airline Pilots’ Association (Balpa), which objected to the new pilots being hired on less attractive terms than colleagues at BA’s main operation. The wrangle went to the high court, but Balpa withdrew because of the high costs linked to a prolonged legal dispute.
Abandoning OpenSkies would be a blow to BA’s credibility more than anything, as the subsidiary is a relatively small part of the group with only four aircraft.
A BA spokesman refused to comment on the disposal OpenSkies but told The Guardian: “Every part of our business is under review in these difficult and challenging times.”
Other airlines, including Air France, have launched transatlantic routes since the treaty came into effect, but all are making losses in the current climate.
Meanwhile, the intense battle between Virgin Atlantic and BA continued to hot up over the weekend. Richard Branson weighed into BA by urging the government to resist any attempts to bail it out.
“It would not be in Britain’s interest,” he said.
“We and others are standing by ready to take on their routes and runway slots at Heathrow if they get into serious trouble. I thought the US government’s bail-out of the car companies was a bad idea and it’s the same for BA.”
Branson also said his airline had considered a bid for BA, but concluded that the company’s liabilities - in particular its pension deficit - were too great.
“It’s not worth much anymore because of the liabilities. We were thinking about if the shares went under 100p, but it would be better to wait for its demise,” he said.