BA considers Gatwick-based independent short-haul airline

LONDON (Reuters) -British Airways said on Friday it was considering setting up a new independent subsidiary for its short-haul operations at London's Gatwick airport.

The airline, owned by Anglo-Spanish group IAG, said that the new unit would also be branded British Airways and would offer the same standard of service.

BA said last month it was evaluating operations at the airport, London's second biggest after Heathrow, which is its main hub.

"We believe that our proposals for an independent subsidiary will enable us to both maintain the British Airways customer experience and be competitive in this environment," it said.

BA said its operations at Gatwick had not been profitable for a decade, including in 2019 before the pandemic hit.

It has struggled to compete with low-cost carriers such as EasyJet at the airport. Creating a independent subsidiary would enable BA to lower its cost base, such as staffing bills.

It is not currently operating any short-haul flights from Gatwick because of COVID-19 travel restrictions.

"Whilst we want to restart flying short-haul from Gatwick, we will only do this if we have a competitive and sustainable operating cost base," it said.

BA, which is discussing the proposals with its unions, said it was also evaluating alternatives for its Gatwick slots.

Rival Ryanair delivered a downbeat assessment of the proposals, with Chief Executive Michael O'Leary questioning BA's choice of Gatwick as a hub.

"If you were going to open up a low-cost carrier, the one airport in London you wouldn't go to would be Gatwick," he said, adding it was London's second most expensive.

(Reporting by Paul Sandle, Editing by Kylie MacLellan and Alexander Smith)