Some stability on horizon for BA
Thursday, 31 Jul, 2009
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British Airways made a pre-tax loss of £148 million in the three months to the end of June, against a profit of £37 million in the same period last year.
The operating loss of came in at £94 million compared with a profit of £35 million a year earlier.
Revenue dropped by almost 17% in the three months, with “no visible signs of improvement,” according to chief executive Willie Walsh.
Looking forward, BA said the industry continued to face “very difficult” trading conditions, with “considerable uncertainty over the likely timeframe of the recovery from the global economic downturn”.
However, the airline said underlying volumes and seat factors stabilised during the quarter and are expected to improve in the peak summer months, but yields remain “volatile”.
The airline lost 1,450 jobs since March 31 through voluntary redundancies, reduced overtime and increased part time working.
The overall workforce has been cut by 4,000 in the last 12 months. Around 7,000 employees have volunteered for schemes in support of the airline’s cost reduction programme, BA said.
“We continue to work towards a permanent structural change to our employee cost base, which is essential to our short term survival and long term viability,” said Walsh, who added that talks with unions were continuing.
Describing trading conditions as continuing to be “very challenging,” he said traffic volumes were down considerably compared to last year.
“Our work to reduce costs, which started last October, is beginning to bear fruit as they are down 6.6 per cent but with revenue still weak, there is much more to be done,” added Walsh.
"In light of that, we have revised our business plan to address the current situation.
“Further capacity has been taken out of our flying schedule and, during winter 2010, a total of 22 aircraft will be parked.
“The delivery schedule for our first six A380 aircraft has been extended by an average of five months with the second six aircraft delayed by an average of two years.”
The airline is confident of achieving previously indicated targeted reductions by March 2010, said Walsh.
“Our engineers and pilots have voted for permanent change. This is a great step forward. Talks with other union groups continue
“We’re cutting forecast capital expenditure by 20% this year, from £725 million to £580 million, and it’s likely to remain at the same level next year.”
Walsh said punctuality continued to improve with BA’s best ever first quarter performance.
“This is not only at Terminal 5, but also at Gatwick where no other major European carrier at any major European airport can match our team’s record,” he said.
“The strong operational performance is reflected in our customer satisfaction ratings which remain at record levels with more than 75% of customers saying they are extremely or very satisfied with the airline".
Phil Davies
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