COMMENT
Why I'm Selling British Airways

British Airways (LSE: BAY) has been a part of my investment portfolio for quite a number of years. In fact I have owned the shares since the 90s, when Lord Marshall (then just plain old Sir Colin) was at the helm, and Lord King was still banging his gavel at board meetings. But now it's time for me to bid BA adieu, and here's why.

When I first bought shares in BA, it had a promising growth story to tell. Not only were sales growing rapidly, but profits were rising quite swiftly too. Almost certainly, cosy arrangements between various countries' flag carriers helped to ensure that ticket prices were set at levels that delivered decent returns to shareholders. It was, in a nutshell, an investor's dream share - high barriers to entry, limited competition plus some welcome government support to boot.

But over time, the expansion of budget carriers in Europe eroded BA's dominance. Nevertheless, BA was still able to satisfy shareholders with an above-average dividend.

All the while though, there were hopes that BA could find a way to return to growth. That arrived with the launch of Go, its low-fare European carrier that was supposed to take on the likes of EasyJet (LSE: EZJ). Unfortunately, Go lasted all of two years before it went to 3i (LSE: III) for a knock-down price of £100m. The venture capital firm subsequently sold Go to EasyJet for a profit of 170%!

To make matters worse, BA had also axed its dividend as the company went into recovery mode. So, in just a handful of years, BA's story quickly changed from that of growth to income and then to recovery. But no matter, airline veteran Rod Eddington was brought in to turn around the company. In fact, Eddington's efficiency measures, which included laying off some 7,000 employees, have brought the airline back into the black.

But in my view this is probably as good as it is going to get. The airline had an opportunity earlier this month to appease long-suffering shareholders by reinstating the dividend. But it seems that long-term debts of some £4b and a pension black hole of almost £2b could put paid to that for some time.

So without the prospect the growth, and no dividends on the horizon, it time for me to say goodbye to BA.

As a parting thought, I remember Michael O'Leary, the boss of Ryanair (LSE: RYA) once said that in time there will only be four airlines that mattered in Europe. Apart from his own no-frills carrier, the others according to O'Leary are likely to be Air France, Lufthansa and British Airways. That is indeed ringing endorsement for BA, which is so often the butt of O'Leary's criticisms. But in my view, being an airline that matters is not quite the same as an investment that counts.

David owns shares in British Airways, but not for much longer!