BA has revamped its UK regional services and said it would close or sell them if they did not make a profit in two years.
The warning came from David Evans, managing director of British Airways CitiExpress which lost £30m in 2003-4 and about £20m last year.
Under the shake-up the airline is being re-named BA Connect and fares will be cut "by more than 40%", BA said.
From March 26 when the new airline takes off, there will be a single class cabin on all aircraft, buy on board hot and cold food and year round, one way fares from £25 including taxes and other charges.
BA said that said two million seats, more than half the yearly sale, would be available "at the lowest prices."
All tickets on the new airline will be non-restricted and changeable although the latter will incur a fee.
For business travellers, there will be a BA Connect Plus flexible ticket which will allow seat selection at the point of booking and entry to lounges. These tickets will start at £110 one-way.
British Airways CitiExpress was formed by the amalgamation in 2001-2 of four regional BA subsidiaries: British Airways Regional, Brymon Airways, Manx Airlines and British Regional Airlines.
The airline carried 3.8 million passengers last year and serves a total of 32 destinations from a total of 14 UK airports.
Among these are major regional airport like Manchester, Birmingham, Aberdeen, Glasgow and Edinburgh.
Countries served by CitiExpress from the UK regions include: Germany, France, Italy, Spain, Austria, Norway, Belgium and Switzerland.
The airline has faced fierce competition from low cost carriers like Ryanair and easyJet which between them challenge it on most of its routes.
The shake-up will not affect BA flights from London City Airport or those from Heathrow or Gatwick which will continue to offer complimentary catering on short haul services and a separate Club Europe cabin on the European network.
Mr Evans said: "The restructuring of the regional business will set us apart in this fiercely competitive market. We have an innovative service promise for business and short-break leisure air travellers, offering year-round, one-way prices that match the no-frills airlines.
"The move is a direct response to changing customer needs and the challenges that have emerged in the marketplace since the creation of British Airways CitiExpress."