BRITAIN'S second-largest scheduled airline company is to float with a price tag of around #95m, writes Andrew Wilson.

British Regional Airlines Group (BRA) operates under a British Airways' franchise using BA logos and, of strategic importance, it has access to the ''world's favourite airline's'' international ticketing and marketing systems.

The eight-year franchise which runs until the end of 2002 allows it to run services throughout the British Isles with more destinations than any other carrier.

Its Scottish routes which account for about 30% of the total are hubbed at Edinburgh, Glasgow and Inverness and include those from Aberdeen to Glasgow, Leeds, Orkney and Shetland, Inverness to Gatwick.

The only subsidised service is that between Benbecula and Stornoway for which BRA receives #150,000 annually.

The company began life in 1982 as Manx Airlines with the Isle of Man still its headquarters.

It merged with BRA in 1991 and took over most of Loganair's operations in 1994 as part of Sir Michael Bishop's British Midland but was de-merged last year.

One reason for the flotation is to raise #20m, of which almost #8m will be used to repay debt to British Midland.

Sir Michael refused to comment as to whether British Midland is being floated - his personal stake in BRA is being reduced from 53% to 30% as a consequence of the Stock Exchange listing.

BRA currently has 46 aircraft and operates from 86 routes including a handful into Europe as far east as Berlin and as far south as Zurich.

It carried 2.16 million passengers last year, an 18% increase.

Sir Michael emphasised that it is not a low-cost, no-frills airline. He added that it had benefited from de-regulation which has resulted in regional airlines growing twice as fast as the main carriers.

Its large number of routes give it more protection if a competitor does appear and the cheap operators such as RyanAir, Debonair and easyJet had made no impact as most of the BRA traffic is business related.

Chief executive Terry Liddiard is expecting a surge in traffic as the fleet of 49-seater Brazilian-built Embraer 145 twin-engined jets with Rolls-Royce engines is built up from the five to 15 aircraft.

Where they had replaced turbo-props passenger numbers had risen by 60%.

Last year, pre-tax profits more than doubled to #3.86m on turnover 20% ahead at #165m.

But more important is that BRA, which, in 1996, won the Air Transport Regional Airline award, is seeing steady improvements in both passenger seat factors to now almost 64% and also rising yields.

It has also more slots at the fast expanding Manchester Airport than any operator apart from BA with its biggest concern being that it does not have sufficient access to either Heathrow or Gatwick.

Sir Michael said that the abolition of duty-free on aircraft was not an issue for BRA with his biggest concern being fuel costs which are at an historic low at present.

The flotation, which is taking the form of a placing with institutions, is being handled by Dresdner Kleinwort Benson with roadshows in both Britain and North America. The company can be controlled only by EU nationals.

The full prospectus will be published next month.