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BA to press on with Open Skies

British Airways appears prepared to invest heavily in its all-premium transatlantic operation OpenSkies, after deciding against both selling the division and seeking external investors.

Earlier this year the flag carrier recruited a specialist investment bank, Reynolds Partners, to look at options for disposing of a controlling share in OpenSkies.

But while BA attracted strong bidding interest from five investors, the assessment of OpenSkies has suggested that the subsidiary has a more promising future than originally suspected.

"We have no plans to sell OpenSkies or seek third-party investment," says the airline. "It still has very strong strategic and financial value." OpenSkies operates Boeing 757-200s on the Paris-New York route, the airline's only service after it axed flights from Amsterdam. It say the Paris operation is "still strong".

BA declines to detail specific reasons for abandoning the proposed sale, and Reynolds Partners confines itself simply to saying it has concluded a "successful process". But a source familiar with the situation states that BA is looking at investing some £25 million ($41 million) into OpenSkies over the next 12 months, signalling a renewed confidence in the subsidiary and a possible expansion of its operation.

He points out BA's liquidity problems have eased and the airline is more capable of putting its own capital into the all-premium carrier. The improved performance of OpenSkies, plus the level of outside interest, has also generated a sense it has better prospects than previously thought.

OpenSkies had originally planned to introduce more 757s and start up routes from other European cities such as Frankfurt, Milan and Brussels.

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