BA targets new routes to Asia and North America

12 Nov 2012 by BusinessTraveller

British Airways is set to use its former Bmi slots at Heathrow for long-haul flights to Asia and North America.

The carrier is due to launch services to Seoul in South Korea next month and Willie Walsh, chief executive of parent company IAG, said they were in negotiations with “several airports” in Asia about new routes.

“Asia is an opportunity - particularly now we have flights at Heathrow through the acquisition of Bmi,” said Walsh during a presentation to City analysts.

“We are currently under-served in that market although we will not be looking to enter the intra-Asia market as we don’t think we have the expertise to do that. It would also be very expensive and probably loss-making.

“Our focus is on serving growth markets from Asia into Europe. We are just about to start a route to Seoul and we plan to launch a number of new destinations in Asia.

“Lots of airports are keen to see a BA presence and we are in dialogue with them. There’s a significant opportunity to increase our Asian presence in a profitable way – particularly with the delivery of the Boeing 787s next year.”

BA has picked up 56 extra slots at Heathrow following the purchase of Bmi earlier this year. But 14 of these slots are set to be transferred to other carriers as part of IAG’s deal with the European Commission’s competition authorities. Virgin Atlantic is among the bidders for these slots and the decision on who gets them is expected in December.

IAG said that many of the remaining 42 slots at Heathrow will be converted from short to long-haul routes.

Walsh added that BA would also use some of its extra slots at Heathrow to increase its flights to North America.

“We will further expand into the North American market – it’s always been very important for BA and it continues to be a market where there’s growth opportunity,” he said.

IAG said that it was expecting that the Bmi part of the business would break-even in the second half of 2013 – six months earlier than previously forecasted - and would be making an annual profit of £100 million by 2015.

Bmi was losing around £200 million a year before it was sold by Lufthansa in April. IAG said these losses had already been reduced to below £100 million this year – partly due to a £40 million rise in sales due to “the power of the BA machine”.

Walsh praised BA’s management team for their “excellent job” in integrating Bmi into BA which had “gone much better than we could have expected”.

“All the bits of Bmi that have been targeted for integration have been completed,” added Walsh. “There’s still work to be done in shutting down the bits of Bmi that we do not intend to keep.”

Among the former Bmi assets up for sale is the airline’s former headquarters at Castle Donington in the east Midlands.

BA is also promising that it will begin “focusing more on short haul” as well as driving extra business through its Avios loyalty points programme, which replaced Airmiles last year.

Drew Crawley, BA’s commercial director, said: “We have a better product than the competition but we just haven’t gone out and told people about it.

“We have great prices and we will be developing new price products which will make us even more competitive.”

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Report by Rob Gill

This article was originally published on our sister website

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