UPDATE 2-British Airways' new Gatwick unit given second chance by union

(Adds BA statement, share price)

LONDON, Oct 4 (Reuters) - British Airways has signalled it
could reverse its decision to scrap short-haul flights from
London's no.2 airport Gatwick, after its pilots union took a new
proposal to its members about BA's plans to set up a cheaper
unit.

British Airways, owned by IAG, was looking for
alternative uses for its Gatwick slots but could now stay to
compete there against low cost airlines such as easyJet
if pilots give it the go-ahead in a ballot later this week.

British Airways had said on Sept. 23 it would end its
short-haul operations at Gatwick, blaming pilot union BALPA's
rejection of the plans for the new unit, but talks were now back
on.

"Last week BALPA asked us to resume discussions. These talks
were constructive, addressed key concerns and have secured the
efficiencies required," a BA spokesperson said on Monday.

BALPA confirmed on Monday that it was consulting with its BA
members about improved pay and conditions for Gatwick pilots,
adding: "The result of the ballot will be declared later this
week."

BA's main operations run out of London and Britain's biggest
airport Heathrow. During the pandemic, when it has struggled
financially, it has focused on Heathrow's more profitable
routes.

Historically it says its short-haul operations at Gatwick
have been unprofitable, and it wants to create a new unit which
runs more cheaply but which it says will offer a "full service"
with the look and feel of BA.

Shares in BA traded down 0.3% to 187 pence at 0914 GMT,
paring earlier gains of 2%.

The news was first reported by The Telegraph newspaper.
(Reporting by Sarah Young in London and Nishit Jogi in
Bengaluru; Editing by Daniel Wallisl Lisa Shumaker and Andrew
Heavens)