British Airways’ (BA) all business-class subsidiary OpenSkies will suspend services between Amsterdam and New York from mid-August in an effort to stem its losses.
OpenSkies will continue to operate between Paris Orly and New York, but chief executive Dale Moss acknowledged: “The economic environment has produced a significant drop in demand.”
BA described the future of OpenSkies as “under review”. It has recruited investment bank Reynolds Partners to explore options for raising capital and is believed to be considering selling a majority stake in the subsidiary.
OpenSkies began flying in June last year following deregulation of flying between the US and Europe on March 30 2008, which allows airlines to fly from anywhere in Europe to anywhere in the US.
BA established the subsidiary at Orly, intending to eat into the corporate market share of Air France, and paid £54 million for existing business-only carrier L’Avion – also based at Orly – before merging the two. OpenSkies began flying from Amsterdam last October.
BA chief executive Willie Walsh had been prepared to risk a strike by BA pilots in his determination to get OpenSkies off the ground. The pilots feared OpenSkies would be used to water down contractual terms, but called off their opposition when pilots’ union Balpa said it could not afford a long legal battle.
However, OpenSkies has suffered from plunging premium traffic and further expansion plans were cancelled late last year. BA reported a 14.9% fall in premium traffic across its operations in the year to June.
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