06 February 2009

BA opens talks with unions over pay and productivity

The airline industry continues to face "very difficult" trading conditions on the back of a weak economic environment, British Airways warned today.

BA made a pre-tax loss of £70 million for the nine months ending December 31 against a profit of £816 million for the same period the previous year.

The decline was due to the weak economy and fall in the value of sterling.

BA continues to predict an operating loss of around £150 million for the financial year.

"Our efforts are focused on continuing to improve the customer experience and the profitability of the business during very difficult trading conditions," the airline said.

"The current weak economic environment drives a need for significant cost reduction, as revenue growth will be difficult. In the period we completed a management restructuring and associated voluntary severance programme.

"We have opened discussions with the trade unions about pay and productivity, which is required to improve the financial performance of the company."

Chief executive Willie Walsh said: "These results have been hit by further economic weakness and the fall in sterling. This has resulted in an operating profit of £89 million.

"Revenue up 6.2 per cent received significant support from currency which more than offset volume declines.

"Costs were up by more than £1 billion in the period at £7 billion reflecting the significantly increased fuel costs and the impact of weak sterling. Fuel costs were up almost 50% at £2.2 billion. Non-fuel costs rose by £335 million to £4.7 billion.

"We have already taken several actions to offset the unprecedented economic conditions.

"We have increased our sales activity in markets with stronger foreign currencies to benefit from exchange and continue to offer competitive fares in both premium and non-premium cabins.

"We continue to review every aspect of the business to control costs while at the same time improving the customer experience and operation."

The airline revealed that it had finalised the design and certification of our new first class cabin which will appear on the long haul fleet later this year. It will also be introduced to new Boeing 777-300s for delivery in 2010.

The airline’s new Club World cabin has been fitted on 19 out of 42 Boeing 777s in addition to all 57 Boeing 747s with all aircraft to be completed by the end of the year.

A new cabin configuration will guarantee Club Europe passengers a window or aisle seat from February 23. The new configuration will see the removal of the use of the middle seat in the short haul business class cabin.

More than 17 million customers have travelled through Heathrow Terminal 5 since it opened last year.

"Customer feedback continues to be excellent with record breaking scores in our own monthly customer survey," BA said.

by Phil Davies