UPDATE 1-Northern Foods wins BA catering contract - source
* Northern Foods awarded BA catering contract, source says
* Industry source says 10-year contract to start in 2010
* Marks first move by Northern Foods into contract catering
* Shares rise as much as 4 percent
(Adds shares, background)
LONDON, Dec 4 (Reuters) - British food manufacturer Northern Foods (NFDS.L) has been awarded the catering contract for all British Airways (BAY.L) short-haul flights out of Heathrow, replacing Gate Gourmet, an industry source said on Thursday.
The deal marks Northern Foods first move into contract catering as it seeks to fend off a looming recession and fulfils a pledge by the company last month to diversify revenue streams.
Shares in Northern Foods which had been 0.5 percent higher ahead of the news extended their gains to trade as much as 4.1 percent higher at 56.50 pence.
The stock was up 3.7 percent at 56.25 pence by 1125 GMT and outperforming gains of 1.1 percent for mid-cap stocks listed in London .FTMC.
The source, who is familiar with the deal, told Reuters a ten-year contract commencing in 2010 had been awarded to Northern Foods which makes Goodfella's pizza, Fox's biscuits and own-label brands for supermarkets.
Gate Gourmet will continue to be British Airways' catering provider on all of its other flights.
(Editing by Paul Hoskins)
