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British Airways Cancels Flights as T5 Chaos Continues (Update6)

By Tracy Alloway and Steve Rothwell

March 28 (Bloomberg) -- British Airways Plc canceled 72 flights at London Heathrow airport's new Terminal 5, or 20 percent of the scheduled total, as the building's chaotic opening spilled into a second day.

A breakdown in a computerized baggage-handling system combined with delays at staff car parks and security checkpoints to disrupt travel for more than 6,000 people. British Airways, the new terminal's sole occupant, said the disruption was a knock-on effect from ``operational problems'' yesterday. Airport owner BAA Ltd. declined to comment on the cancellations.

Terminal 5 took 4.3 billion pounds ($8.6 billion) and 20 years to plan and build as the U.K. government battled campaigners who said the facility would only add to congestion at Europe's busiest airport. The breakdown is an embarrassment for London- based British Airways, which said the terminal would ease travel and retain customers disillusioned with Heathrow's overcrowding.

``The shambles we have seen at Terminal 5 is yet another depressing chapter for the U.K.'s crumbling transport system,'' David Frost, director general of the British Chamber of Commerce, said by e-mail. ``This is a PR disaster at a time when London and the U.K. are positioning themselves as global players.''

British Airways, already Europe's worst airline for lost luggage and the second-worst for delayed bags, according to the Air Transport Users Council, fell 7.25 pence, or 2.9 percent, to 240 pence. Stock of Spanish builder Grupo Ferrovial SA, which owns BAA, declined 1.09 euros, or 2.3 percent, to 46.37 euros.

Cancellations Tomorrow

British Airways plans to cancel a further 54 short-haul flights from Terminal 5 tomorrow, or about 15 percent of the schedule, it said this evening in an e-mailed statement. Long- haul services should operate as timetabled.

The carrier's smallest plane at Heathrow is Airbus SAS's A319, which can carry about 130 passengers. It fills an average of 68.4 percent of seats, based on February figures, suggesting at least 6,400 people would have been affected by today's cancellations. U.K. press reports put the total as high as 14,000. A company spokeswoman, who declined to be identified, said she was unable to provide an estimate.

Passengers flying from Terminal 5 yesterday afternoon and evening were permitted hand luggage only after the baggage system was shut down and British Airways canceled at least 33 flights. The carrier, Europe's third-biggest, said customers today can check in both hand and hold baggage, though they should phone first for flight information.

Recorded Message

Gabi Zimpfer, traveling with her family to Basel, Switzerland, said she got a recorded message when ringing the British Airways helpline and had to turn to a travel agent in Germany for information. Her 2:05 p.m. flight was canceled and she was booked onto an evening departure.

``At first we thought it was a joke,'' said Zimpfer, a religious instructor. ``Nobody has told us anything.''

Terminal 5 boasts 60 aircraft stands and 17 kilometers (10.6 miles) of baggage conveyors designed to handle as many as 12,000 bags an hour. Over 400,000 man-hours went into developing the mechanism's computer software. Difficulties experienced by staff in logging on to the system were blamed for some the delays.

`Unique Challenge'

``We always knew the first day would represent a unique challenge,'' Chief Executive Officer Willie Walsh said in a statement. ``A number of early problems grew during the course of the day which led to significant disruption. We sincerely apologize to those customers who have suffered.''

British Airways took possession of the building from BAA in September. The carrier started what it describes as ``exhaustive'' customer trials that month, with volunteers invited to play the part of travelers.

``When I got here and I didn't get my luggage, I started getting grumpy,'' said Shirley Egan, a personal assistant from west London who flew to Terminal 5 from Geneva today. ``I've no idea where it is, or when it's arriving.''

After waiting an hour for her bags, Egan was told by British Airways staff that she could return to the airport later to collect them.

Heathrow is not unique in suffering setbacks after adding capacity. Six people died in May 2004 when a roof at Paris's Charles de Gaulle new terminal collapsed onto a footway, while passengers at Madrid's Terminal 4 were still losing luggage nine months after the building opened in February 2006.

Weekend Disruption

British Airways today estimated it would operate 308 of 380 scheduled flights. Cancellations will continue tomorrow, when 347 takeoffs and landings were originally timetabled.

``I think it will get better every day as we become accustomed to the building and the quirks of the system,'' CEO Walsh said in the statement. ``I am not pointing the finger at BAA. Both British Airways and BAA made mistakes, but I am taking responsibility for the mistakes we made. We have to correct those and make this fantastic terminal work.''

Walsh blamed ``Heathrow hassle'' for dissuading people from traveling with British Airways when he cut the carrier's full- year sales forecast last August. Before today, Heathrow was handling 68 million passengers a year in buildings meant for 45 million. T5 will expand capacity by 30 million to 75 million.

The rest of Heathrow, which sees about 1,300 flights a day, is operating normally, said a BAA spokeswoman.

``BAA's first duty is to passengers and airlines,'' the company said in a statement. ``We are focusing all our efforts on our work with British Airways to resolve baggage issues and to deliver a good service to passengers.''

Ferrovial Confident

Madrid-based Ferrovial, which paid $20 billion for BAA in 2006, said the failures at Terminal 5 would soon be fixed.

``I am convinced British Airways will have resolved this within a few days and everything will be running well,'' Ferrovial CEO Joaquin Ayuso told reporters at the company's annual investor meeting today. ``The infrastructure itself is working really well. We have absolutely no problem there.''

BMI, Heathrow's second-largest user after British Airways, said it wasn't affected by the turmoil.

``Heathrow's reputation has taken yet another blow,'' BMI CEO Nigel Turner said in a statement. ``But the fact is that BA's problems at Terminal 5 do not mean that the whole of Heathrow is in meltdown. We and other airlines continue to operate normally.''

Virgin Atlantic Airways Ltd., the third-biggest user of Heathrow, said 200 British Airways passengers had switched to its flights because of the delays.

`Free Gift'

``BA was handed a huge free gift on a plate with T5 but the problems of the past couple of days go to show they can't unwrap it properly,'' said Paul Charles, a spokesman for London-based Virgin Atlantic.

NetJets Europe, which leases private airplanes, said it's flown 88 percent more flights into and out of London and surrounding airports in the past 24 hours as a result of the Heathrow breakdown.

Terminal 5 received its first flight, from Hong Kong, at about 4:50 a.m. yesterday. British Airways earlier spent five hours moving 1,000 aircraft, vehicles and pieces of equipment.

To contact the reporters on this story: Tracy Alloway in London at talloway@bloomberg.net; Steve Rothwell in London at srothwell@bloomberg.net

Last Updated: March 28, 2008 16:16 EDT

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