British Airways announces record loss
Updated on 06 November 2009
The troubled airline company announces a pre-tax loss of £292m as cabin crew hours are "unwillingly" slashed in a bid to save money.
The airline, which recorded a loss of £401 million in its previous financial year, said total revenues slumped by almost 14 per cent in the six months to the end of September.
It is the first time that BA has recorded a first half loss - normally a buoyant period for the airline as it includes the holiday season.
Today's deficit is around £40m higher than city analysts had been expecting. Even when items such as pension costs are excluded BA made a loss of £111m, against a profit of £140m a year earlier.
The industry as a whole is expected to lose £6.65bn this year as a result of the recession's impact on passenger numbers and demand for business class travel.
Willie Walsh, chief executive, said the company reduced costs by some £400m after manpower was cut by 1,900 roles through reduced overtime, increased part-time working and voluntary redundancy.
"With revenue likely to be £1bn lower this year, we can't stand still and further cost reduction is essential," he said.
He said a further manpower reduction equivalent to 3,000 roles was planned by March next year, along with a 6 per cent cut in winter capacity.
BA is locked in a fight with unions over its plans for job cuts and a pay freeze and has faced the threat of industrial action from different sections of its workforce.
The union Unite launched legal action in the High Court yesterday in a bid to stop the imposition of new contracts for new cabin crew. It has agreed to work to the new schedule until the outcome of the legal action is known.
Business Correspondent John Sparks said:
"Analysts are now predicting that the airline will lose £600m for the entire year and if you add up those losses after the last two years you come to the grand total of a billion pounds.
"But here's the funny thing - BA's shares actually went up 12 per cent this morning which is strange when you consider that the full service airlines like BA have taken a real hammering this year because of the recession.
"But investors clearly think that Willie Walsh and his team can cut costs and they can turn this airline around. But he has got serious problems with his cabin crew - a real industrial dispute.
"He will implement new changes to the cabin crew in ten days time. Their numbers will be reduced on planes and the union Unite is likely, I understand, to ballot members on a national strike starting next week with the potential of strikes before Christmas a real reality."
