British Airways announced a revamp of its regional business yesterday aimed at returning the unit to profit and fending off rival budget carriers.

The long-awaited shake-up falls short of job or fleet cuts but introduces a new fare structure and a new name, with its CitiExpress subsidiary renamed BA Connect.

The business serves airports excluding London's Heathrow and Gatwick and flies within the UK and to some European destinations.

It will offer "year-round, one-way prices that match the no-frills airlines" with added service, BA Connect Managing Director David Evans said in a statement.

"The move is a direct response to changing customer needs and the challenges that have emerged in the marketplace," he said.

Fares including taxes, fees and charges will begin at £25, said Europe's third-largest airline by traffic.

Like budget airlines, BA Connect will have single-class cabins and "buy-on-board" hot and cold catering.

BA shares were down 1.89 per cent at 324-1/2 pence, while London's FTSE 100 index was down 0.52 per cent at 1211 GMT.

"It's good for (CEO) Willie Walsh that he's done this; it's a step in the right direction, but it's about five years too late," said analyst Nick van den Brul at Exane BNP Paribas in London. "Air France and Lufthansa did this years ago."

Further details are to be announced on February 1, and all changes will take effect on March 26, BA said.

BA continues to make most of its profits on its North Atlantic routes and last year lost money in Europe, where budget carriers led by Ryanair and easyJet continue to expand.

Last week, BA reported December passenger traffic up 4.7 per cent, though UK/Europe volume was down.