ATW Daily News

BA to begin long-haul T5 transfer as under-fire BAA gets £400 million injection

Monday May 12, 2008

British Airways will begin shifting long-haul flights to London Heathrow's Terminal 5 next month, it said in a joint statement with airports operator BAA.

The move will be phased, in contrast to the short-haul transfer that coincided with an operationally disastrous opening of its £4.3 billion ($8.4 billion) new home in March. "We will move our Terminal 4 long-haul program into Terminal 5 in phases," BA CEO Willie Walsh said, noting that the carrier took this decision "in the interests of customers." He added: "Terminal 5 is now working well."

On June 5, flights to and from eight long-haul destinations will transfer to T5: New York JFK, Abuja, Bangalore, Beijing, Cairo, Cape Town, Lagos and Phoenix. Combined they amount to about a quarter of BA's T4 schedule.

"I am pleased that we have reached this decision jointly. BAA and BA have worked together effectively to resolve the initial problems at T5 and to plan this next move," BAA CEO Colin Matthews said. "We continue to work together intensively to complete the migration of the remaining long-haul services as soon as is practicable." BA originally intended to shift all remaining flights from other terminals to T5 in just a couple of days at the end of April (ATWOnline, April 14).

Separately, BAA said shareholders agreed to inject £400 million into the group following failure to finalize certain aspects of its planned debt refinancing, "including completion of the rating process and obtaining sufficient commitments from the banks asked to participate."

The operator intended to initiate the implementation of a new debt structure, backed by its three London airports (LHR, Gatwick and Stansted) and the Heathrow Express, by the end of the second quarter and to complete the refinancing early in the third. But last week it admitted it "ultimately" may not be in position to begin negotiations "owing to continuing challenging market conditions." BAA took on debts of around £9.6 billion when it was bought for £10.3 billion by a consortium led by Ferrovial in 2006.

Last month the UK Competition Commission suggested in its interim report on its investigation into the market for the supply of airport services by BAA that its common ownership of seven UK airports may "not be serving well the interests of either airlines or passengers" and indicated it may require BAA to sell "one or more" of its airports (ATWOnline, April 23).

by Cathy Buyck

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