31/07/2009

BA Flies Into Financial Turbulence

The UK flag-carrier, British Airways has today stunned the financial markets by reporting a pre-tax loss of £148m ($245m) in the three months to the end of June.

The news is made worse when compared with a profit of £37m in the same period last year.

Its operating loss of £94m compares with a profit of £35m last year.

However, its losses come in the middle of a tough year for airlines as passengers cut back spending in the recession.

"Trading conditions continue to be very challenging," Willie Walsh, the airline's Chief Executive said.

"While traffic volumes are down considerably compared to last year, they have stabilised during the quarter and show some signs of improvement for the peak summer months," he added.

Passenger revenue fell 12.5% while the worldwide decline for airfreight has also hit its cargo business, where revenues were down 28.1%.

In June, airline bosses asked thousands of staff to work for free for up to one month to keep the airline in business.

The airline had already cut staff by 1,450 since the end of March through "reduced overtime, increased part time working and targeted voluntary redundancy", he said.

Meanwhile, negotiations continue with unions representing cabin crew and ground staff.

Painting a positive picture in grim times, Mr Walsh insisted: "Total operating costs are down 6.6%, but "with revenue still weak, there is much more to be done."

Also, while trading conditions remain difficult for BA and other airlines, the company will be helped by easing fuel prices.

BA's fuel bill was expected to be between £450m and £500m lower this year than last year.

(BMcC/KMcA)

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