British Airways posts 148 mn pound loss
Struggling British Airways said on Friday it slumped to a historic first-quarter pre-tax loss and warned the outlook remained uncertain as the global economic downturn slashes demand.
London: Struggling British Airways said on Friday it slumped to a historic first-quarter pre-tax loss and warned the outlook remained uncertain as the global economic downturn slashes demand.
In a dire results statement, BA said it made a pre-tax loss of 148 million pounds (173 million euros, 245 million dollars) in the three months to June, compared with a profit of 37 million pounds in the 2008 quarter.
This was the first, first-quarter pre-tax loss for the company since its privatisation in 1987.
BA also reported a net loss of 106 million pounds, which contrasted with a net profit of 27 million pounds a year earlier, and an operating loss of 94 million pounds.
The airline warned it would slash costs even further as business conditions remained very difficult and there was considerable uncertainty over the outlook for the airline industry as a whole.
"Trading conditions continue to be very challenging with underlying revenue down 16.8 percent and no visible signs of improvement," Chief Executive Willie Walsh said in the earnings release.
"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. However, yields remain volatile.
"Our work to reduce costs, which started last October, is beginning to bear fruit as they are down 6.6 percent -- but with revenue still weak, there is much more to be done."
The embattled group said it was unclear when the world economy would recover from the current deep slump.
"The industry continues to face very difficult trading conditions, with considerable uncertainty over the likely time frame of the recovery from the global economic downturn," BA said.
Leading commercial airlines across the world are suffering from the massive global economic slump that has slashed demand for air travel and sparked a major cash squeeze for the sector.
BA suffered an annual loss of 375 million pounds for the previous 2008-09 year, which it blamed on high fuel costs.
"Newsflow from BA remains bad and this is an airline that has a hell of a lot to do if it is to carve out a successful future for itself within a much changed, weaker and yet ever more competitive market," said BGC Partners analyst Howard Wheeldon.
In a bid to turn around its fortunes, BA is slashing capital expenditure and cutting around 3,700 jobs during its current financial year to March 2010. BA slashed 2,500 jobs worldwide in 2008-09.
Other cost-saving measures have included pay-freezes and asking staff to work unpaid for up to one month.
In addition, BA announced earlier this week that it would scrap all free meals apart from breakfast on short-haul flights to save 22 million pounds per year.
Passengers on flights lasting less than two hours will only be served drinks and snacks from 10:00 am in the latest belt-tightening move to be implemented from Monday.
In early afternoon trade on Friday, BA shares advanced 6.85 percent to 143.50 pence on the London stock market as investors set aside the results.
"Air France KLM, Singapore Airlines and BA all reported in the past 24 hours," said analysts at Bloxham stockbrokers in Dublin.
"The carnage caused by the ongoing deep recession is evident in the quarterly losses that took place.
"Management comments are remarkably downbeat and the divergence between stock market optimism and real world evidence is stark."