'BA Connect' Is The Cost Of Summer Terror Scare

Conceding that this past summer's terror scare cost it more than previously thought, British Airways announced plans to sell its regional carrier BA Connect.

Many media outlets initially reported the terror plot broken up in London this past August had a minimal financial impact on airline operations. New computations at BA suggest the costs were much higher.

During the tense days following the initial arrests in London many UK flights were grounded causing world-wide disruptions in BA operations. BA now estimates the costs at upwards of $150 million. That's nearly $100 million more than previous reports.

The higher losses prompted BA to sell its regional carrier BA Connect to Flybe. BA Connect has been hit hard by new security restrictions on liquids and the size of carry-on baggage. Short-haul carriers see more carry-on baggage because its customers are more likely on day or overnight trips rather than extended stays.

Based in Manchester, BA Connect employs 1,900. The regional lost nearly $12 million in the first half of the year. BA CEO Willy Walsh says he doesn't expect the regional will make any profit in its current form.

Walsh told the Irish Examiner, "Point-to-point regional operations are not a strategic part of our business and we believe that such activities are better undertaken by a regional low-cost airline."

BA didn't share actual numbers on the deal, but says it will take a 15-percent stake in Flybe.

Flybe is currently 82-percent privately held, but had plans to go public next year. The airline now says it will defer those plans for another year or two.

Flybe will double in size following its acquisition of BA Connect. It will get 35 of BA Connect's 52 routes out of 13 UK airports -- BA aims to keep services from London City Airport and its Manchester to New York route.

FMI: www.britishairways.com