BA less pessimistic despite £292m pre-tax loss
Saturday November 07 2009
BRITISH Airways (BA) said yesterday that it plans to cut a further 1,200 jobs after reporting its first loss in the first half of its financial year.
But shares in the company advanced 6.6pc after the airline said passenger traffic and ticket prices may have turned a corner.
The further job cuts mean that the airline will have shed a total of 4,900 positions by March 2010.
The company suffered a pre-tax loss of £292m (€327m) for the six months to the end of September, compared with profits of £52m a year earlier.
The first half of BA's financial year is usually stronger because it covers the summer holiday season.
The company said revenue over the six-month period was down by 13.7pc to £4.1bn, compared with £4.75bn in the same period of 2008.
BA chief executive Willie Walsh said that this had been the "most difficult year in the history of the aviation industry", and admitted that the airline's revenue is likely to be £1bn lower this year.
But analysts took solace in the fact that the tone from BA was less negative than it had been previously.
"The tone is less pessimistic than last time they reported," said Douglas McNeill, an analyst at Astaire Securities in London with a 'buy' rating on BA stock.
"It may be ugly in headline terms, but the comments are consistent with the notion that this is the bottom of the cycle."
The airline also said it will slash capacity by 6pc this winter.
Airlines could lose $11bn (e7.4bn) this year, according to the International Air Transport Association, with BA suffering a 14-month decline in premium traffic -- which accounts for almost half of revenue -- as business class numbers fell.
Yields have fallen about 12pc this year, BA also said.
"Yields have been particularly low over the last six months so we are starting to see some traction," Mr Williams told Bloomberg Television.
"We're now in a stable period," the airline chief said.
The October decline in business and first-class traffic was the smallest since the collapse of Lehman Brothers Holdings in September 2008 and also less severe than the 2pc drop in economy class travel. (Bloomberg)
Irish Independent
