BA to expand in Madrid after Heathrow ban

The coalition government's decision to scrap plans for a third runway at Heathrow could prompt British Airways to concentrate its business in Madrid after it merges with Iberia.

The airline's chief executive Willie Walsh said his company would focus on Spain if the issue of increased demand for flights was not addressed in Britain.

He told the Financial Times: "You've got a fantastic airport in Madrid that has excess capacity... and we'll grow there.

"Growth is not going to go away. Growth will just leave the UK and go to other parts of Europe. BA will be able to access that growth because our assets are mobile and we can focus on developing Madrid rather than... London."

Earlier this year BA and Spanish carrier Iberia signed an agreement to amalgamate their operations, and shareholders will vote on the plans in the autumn. The new company, with its  main hubs at Madrid and London, will be called International Airlines Group.

The British government's decision to scrap plans for a third runway was welcomed by environmental campaigners, but the aviation industry was dismayed as demand for flights is expected to more than double between 2000 and 2030.

Ministers hope the extra demand can be met by regional airports in England and high speed rail links.

Yesterday Walsh also announced that he was waiving his annual bonus, worth £334,000, for the second year running. The decision came after a third five-day strike by cabin crew who are unhappy at changes to their pay and conditions. ·