Air Transport

British Airways has given its UK regional arm two years to move out of the red or face closure. The ultimatum came last week following the launch of a major rebranding and cost-reduction programme for its CitiExpress division.

Renamed BA Connect, the subsidiary will inherit 50 regional aircraft and morph into a low-fares airline. It will retain main bases at Manchester and Birmingham as well as hubs at Bristol, Edinburgh, London City and Southampton airports.

The division, which was formed in 2001 through the merger of various BA branches, has been suffering annual losses of around £30 million ($54 million), and its parent has given the regional business a two-year deadline to turn a profit. “The business plan calls for the airline to become profitable by the end of the financial year that finishes on 31 March 2008,” says CitiExpress commercial director Steve Cassidy.

According to the division, BA chief executive Willie Walsh has “made no secret of the fact that this new business model has to work” within two years, or face closure.