Europe’s largest airline, British Airways, yesterday confirmed it is to sell its low-cost subsidiary carrier Go. The move is part of a draconian revamp of BA’s in-the-red European operations.
Recently appointed BA chief executive, Rod Eddington, was fulsome in his praise for the controversial subsidiary: "Thanks to everyone who works at Go, it is now a leading European brand. It has made a profit every month this year. However, given the strategic goals we have set for the group as a whole, now is the time for British Airways to gain the benefits of its investment and realise the considerable value it has created in Go."
Eddington also announced better-than-expected results for BA’s second quarter. Operating profits more than doubled to £264m, versus £117m for the same period in 1999. Turnover rose 6% to £2.55 billion and Q2 margins doubled to 10.3%. The take-off was fuelled by an 8.7% increase in yield (revenue earned per seat flown) – the best yet year-on-year improvement by this yardstick.
Business traffic, BA’s most profitable sector, also grew by 7.7% during the quarter, helped by the carrier’s strategy of slashing capacity – down 3.3% in the first six months of the fiscal. Said Eddington: "We are taking a ruthless approach towards poorly performing routes and assets. Those not adding value are being removed. It is imperative that each of our aircraft generates shareholder value."
News source: Financial Times