UPDATE 1-BA ups stakes in bed wars, revamps business cabin

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By Michael Smith

LONDON, Nov 13 (Reuters) - British Airways (BAY.L) will spend 100 million pounds ($191.3 million) revamping its business-class cabins and installing wider beds, its latest salvo in a battle with Virgin Atlantic [VA.UL] to woo high-paying passengers.

Europe's third-largest airline said on Monday it would increase the number of business-class seats by 8 percent, improve in-flight entertainment and splash out on a new interior design under the revamp taking place over the next 18 months.

The new type of seat comes amid intense rivalry between airlines globally to increase their shares of the business-class market by promising to outdo each other on comfort, gadgets and gimmicks.

"This investment will have a handsome return. It will still take a long time for competitors to come up to the BA standard. It is a fiercely competitive environment," BA Chief Executive Willie Walsh told reporters at the launch of the new cabin.

BA shares were up 0.6 percent firmer at 461-1/2 pence at 1312 GMT, while the benchmark FTSE 100 index .FTSE was down 0.37 percent.

BA was the first to introduce lie-flat seats in 2000 for long-haul travellers. Virgin later introduced a new Upper Class cabin with flat beds and a new herringbone layout, which it says has enabled it to steal market share from BA.

"They (BA) are only trying to catch up, and they are a whole generation away of where we were three years ago when we launched the Upper Class suite," a Virgin spokesman said, saying its existing business-class offering was under review.