CITYanalysts claim British Airways is embarking on a high-risk strategy by chasing high margin business through introducing a new cabin class, World Traveller Plus, on long-haul flights.
BA announced a £600m product investment, which includes the new cabin, at the same time as revealing it is to shed over 6,500 jobs in the next three years to help finance the programme.
BA expects the jobs to be lost through natural wastage.
One analyst said:”The people at BA must be off their rockers. They have decided to adopt the strategy of reducing revenue and going for a high margin. In today’s world that is suicidal.
“Every business that has been successful has said let’s let the margin look after itself and go for the revenue.”
He added: “The low-cost carriers are successful because there is only one class.
“Businessmen are quite happy to travel on them. However, when you have four classes, you don’t want to be seen in economy.”
The City also believes BAis running a huge risk in its belief that economy class passengers will upgrade to the new class.
“For every one person who upgrades, another will downgrade from Club World and BA will lose more on the downgrade,” said one insider.
He added: “We won’t know whether the strategy is going to work for two to three years.”
BA is expected to make a £200m loss this year.