DEUTSCHE BA (DBA), the loss-making airline that British Airways effectively paid Hans Rudolf Wöhrl, the German millionaire, £37 million to take off its hands this month, is set to expand in Europe.

The move could see the domestic airline compete against its former parent.

Herr Wöhrl’s ambitions emerged as he asked staff at the airline to take a 15 per cent pay cut, rising to 20 per cent including benefits. The airline gave warning that a failure to accept the pay cut could lead to the loss of between 250 and 300 jobs.

Herr Wöhrl sees European expansion as a key to improving the long-term productivity of the airline’s fleet as he seeks to transform the loss-making carrier.

A spokesman for the company refused to speculate last night on whether Herr Wöhrl would enter the UK market, but confirmed that he wanted to offer more European routes outside the airline’s core German market.

Herr Wöhrl is set to outline his expansion plans in July when he takes control of the airline.

The company said that Herr Wöhrl holds the view “that we have too many staff and too many planes. One way (to resolve this) would be to reduce staff and planes immediately”.

If the deal is accepted by staff the pay cut will remain in effect for a year. Herr Wöhrl believes the airline can expand to accommodate its staffing levels. After a year it is anticipated that pay would revert to present levels with a possibility of 30 to 50 job losses.

He has also said that staff would be given shares in the company once the venture moves into profitability.

Since the formation of the airline in 1992, DBA has not made a profit and has accumulated losses of £250 million.

Last year easyJet indicated an interest, buying an option to purchase the airline. It too hoped to force pay changes on the company’s employees in an attempt to cut costs. But, having spent £6.1 million in retaining its option, the company pulled out in March, citing intransigence of the German trade unions.