BA suffers record loss – hits out at APD rise
Thursday, 22 May, 2009
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British Airways has turned in a record pre-tax loss of £401 million from a record profit of £922 million the previous year.
The airline said the plunge into the red reflected a bleak trading environment.
The carrier is to further cut capacity next winter by taking out four per cent of flying compared to last year, parking up to 16 aircraft.
Chairman Martin Broughton said: “In the last 12 months we have gone from a record profit to a record loss due to the current tough economic environment.
“That only serves to underline the extremely difficult trading conditions that we are facing, despite our best ever operational performance, and any recovery is likely to take longer than initially envisaged.
“The revenue outlook continues to be weak during the current financial year but we expect lower fuel prices to reduce our fuel costs by approximately £400 million.”
Chief executive Willie Walsh also hit out at the government’s move to double Air Passenger Duty from 2010.
This will “undoubtedly disadvantage the UK’s competitive position within the airline industry,” Walsh warned.
He added that there are no base pay increases planned and staff are being offered the option of unpaid leave and temporary or permanent part time working.
“We are also in talks with our trade unions about pay and productivity changes," he said “The results for the year include £78 million of redundancy related costs. Since last summer, our overall manpower has fallen by more than 2,500.”
Looking forward, BA said the industry continues to face “very difficult” trading conditions, with “considerable uncertainty” over the likely timeframe of the global economic downturn.
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Current levels of traffic volume and yield have not improved over the last quarter of last year. We have decided not to issue any new guidance for the half year or the full year because of the difficulty in forecasting revenues.“We anticipate that there will be some additional offset from fuel costs and we will deliver further cost reductions from capacity and other cost saving measures to mitigate the revenue deterioration.”
Announcing the results for the year ending March 31, Walsh said :“Reduced passenger and cargo demand and high fuel prices last summer contributed to our £220 million operating loss as our total fuel bill reached almost £3 billion.
“The prolonged nature of the global downturn makes this the harshest trading environment we have ever faced and, with no immediate improvement visible, market conditions remain challenging.
“It is vital, therefore, that we remain absolutely committed to our plans to establish British Airways as a high-performing, market-focused, global premium airline.”
Walsh said he was “optimistic” that anti-trust immunity will be approved in the next six months so that in early 2010 BA can start its planned joint transatlantic business with American Airlines.
by Phil Davies
Phil Davies
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