British Airways Cancels 50 Flights as T5 Luggage Backlog Builds

April 1 (Bloomberg) -- British Airways Plc canceled 50 flights at London Heathrow airport's new Terminal 5, only four fewer than yesterday, and said the backlog of stranded luggage is still building up.

The airline scrapped 13 percent of scheduled flights from the terminal on the sixth day of disruption at Europe's busiest airport. About 342 services are likely to operate, according to British Airways spokeswoman Amanda Allan.

Cancellations caused by the failure of the 4.3 billion-pound ($8.5 billion) building's computerized baggage system total more than 300 since it opened on March 27. The number of bags waiting to be reunited with their owners has risen by about one-third to 20,000 in the past two days.

``From a publicity point of view clearly this is very bad,'' Stephen Furlong, an analyst at Davy Stockbrokers in Dublin, said yesterday evening. ``It does put a bit of pressure on management.''

British Airways, whose Chief Executive Officer Willie Walsh says he accepts responsibility for the chaos, fell 5.75 pence, or 2.4 percent, to 234.25 pence yesterday. The company's stock has dropped 24 percent this year, reducing its value to 2.7 billion pounds.

Following the failure of an automated baggage screening system, bags that have been unloaded at Heathrow are being re- screened manually. In some instances, this requires the luggage to be driven to London Gatwick airport for the security checks.

More Tomorrow

About 50 flights will also be canceled tomorrow, Allan said. She said no figures were yet available for the rest of the week and that the reduced service is intended to act as a ``firebreak'' to allow the carrier to contain the disruption and get Terminal 5 running as originally planned.

``We are working round the clock to try to deliver the delayed bags as soon as we can,'' British Airways said yesterday. ``This is a highly complicated process.''

The disruption may cost the carrier as much as 50 million pounds, Andrew Fitchie, an analyst at Collins Stewart in London, said in a note to clients, and will clip annual earnings by three-to-five pence a share.

Cancellations are being restricted to short-haul locations to which British Airways has multiple flights, the airline said, so that passengers may be able to rebook on later services. It plans to operate about 87 percent of trips again tomorrow, with a progressively larger flying program throughout the week.

Europe's third-biggest airline is already the continent's worst for lost luggage and the second-worst for delayed bags, according to the Air Transport Users Council.

U.K. Transport Minister Jim Fitzpatrick said yesterday British Airways and airport owner BAA Ltd. must ensure passengers inconvenienced by lost baggage and canceled flights receive the compensation they are entitled to under U.K. law.

`Extremely Regrettable'

``BA and BAA's focus must not be deflected from ensuring the passenger experience improves,'' Fitzpatrick said, speaking in Parliament. ``It's extremely regrettable to say the least that passengers using T5 have had to suffer a poor experience.''

British Airways had been counting on Terminal 5, which took 20 years to plan and build, to help ease journeys and retain passengers put off by Heathrow's overcrowding. The airline took possession of the complex in September from BAA, which is owned by Madrid-based Grupo Ferrovial SA, starting what it described as ``exhaustive'' customer trials that month.

Terminal 5 boasts 17 kilometers (10.6 miles) of baggage conveyors designed to handle as many as 12,000 bags an hour. More than 400,000 man-hours went into developing the mechanism's computer software, which has the ability to automatically sort and prioritize incoming bags.

The disruption comes amid intensifying competition at Heathrow. Delta Air Lines Inc., Continental Airlines Inc. and Northwest Airlines Corp. began flights to the airport yesterday under a new ``Open Skies'' trans-Atlantic air travel treaty.

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

To contact the editor responsible for this story: Chris Jasper at cjasper@bloomberg.net.