OpenSkies to become ClosedSkies?

If you're not familiar with OpenSkies, it's the premium transatlantic brand that British Airways launched a year ago with some BA 757s, which fly in an all-business class configuration. It merged with French competitor L'Avion last July, and the process was completed in April. The subsidiary took advantage of the identically-named Open Skies treaty, which allows European Union airlines to fly from any EU country to the US.

But The Guardian is now reporting that BA, faced with deepening financial troubles, is looking at shutting down or selling off OpenSkies. BA, which itself developed much of its product around catering to business travelers, has been adversely affected by the drop-off in business travel over the last year, and it's not unreasonable to think that OpenSkies, an all-business class airline, must be affected in the same way. "Every part of our business is under review in these difficult and challenging times," said a British Airways spokesperson. "Closing [OpenSkies] would have no material effect on our financial performance," said CEO Willie Walsh. "But the team there knows that it will close if it does not deliver on its business plan."

The report conflicts with recent statements by Dale Moss, OpenSkies' managing director. "We are not on the business plan that we set out, but we are not far off - we are probably nine months off where we wanted to be at this particular time," he said. Moss stressed that despite the downturn in business travel, the airline will continue flying. More importantly, Moss said that OpenSkies will try to use its lower cost base to compete more effectively against its transatlantic competitors. But BA's operating in crisis mode, and if the operation isn't making money, then its future looks bleak. The fact that Walsh is publicly talking about giving OpenSkies the axe can't be a good sign.