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BA suffers worst winter as City flyers go economy
Robert Lea6 Feb 2009
British Airways is having its worst-ever winter, losing up to £3million a day - nearly £20million a week - as passengers refuse to pay its high fares to fly first or business class.
Latest figures also reveal that the troubled UK flag carrier's debt is rising at £100million a month and since last spring it has burnt through cash at a rate of £1 million a day.
BA today revealed pre-tax losses of £70million for the first nine months of its financial year up to the end of December. However, the rate of losses is accelerating.
The airline said at the underlying operating profit level it made £89million in the nine months.
Despite this, it has signalled it expects to see an operating loss of £150million for the full year to the end of March.
That means operating losses in January, February and March are set to come in at £239million - BA's worst winter trading quarter on record.
What is hurting BA is the lack of passengers prepared to pay the prices to fly at the front of its aircraft - the lucrative business and first class flyers who are key to BA's profitability.
January passenger statistics reveal BA's so-called premium traffic has crashed by nearly 14 per cent.
That is its worst month yet in the current recession, following falls of 12 per cent in December, 11 per cent in November and 9 per cent in October.
The collapse in passenger sentiment in the last month was such that BA went from indicating a small, full-year profit in a trading statement on 6 January to a warning of £150million losses in a statement to the Stock Exchange on 26 January.
"We are seeing our worst fourth quarter by some way," said finance director Keith Williams. "We are seeing a steady decline in premium traffic, the effect of what has happened in the financial services industry since September."
He declined to comment on claims by easyJet and Ryanair that BA passengers and business class flyers in particular are trading down to the budget airlines.
"We are seeing a fall in the volume of bankers flying," he said. "There are fewer of them."
Chief executive Willie Walsh blamed the poor financial performance on the airline's fuel bill despite the 70 per cent collapse in the price of crude oil over the last six months.
He said over its first three trading quarters, the fuel bill increased 50 per cent to £2.2billion.
Walsh was feted last year when he delivered profits of £875million, hitting the airline's long-wished-for target of a profit margin of 10 per cent.
But the forecast results for this year indicate a turnaround in BA's fortunes of more than £1billion in a year.
Infamous for his cost-slashing both at BA and his previous airline, Aer Lingus, Walsh indicated there may be more on the way.
BA's debts rose 70 per cent between the end of March to the end of December to £2.2billion.
Williams said much of that was due to foreign exchange movements resulting from the fall in value of the pound.
Over the same period, the airline's cash levels have fallen £278million to £1.6billion.
£150MILLION - British Airways' forecast operating losses this year
£2.2BILLION - BA's debts after a 70 per cent rise in borrowing last year
Reader views (15)
Ba is A great airline the staff are always helpful and the planes are clean and well kept, some of these critics should try americain airlines they are all run down old banged out air craft and the staff are angry and over worked, long may B.A keep flying, I think Mr Walsh does a fine Job
- David Coyle, San Francisco ca, usa, 03/06/2009 01:42
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No wonder: even though this Willy Walsh always has a smug face they are falling behind big time. They have low service levels and high fares. For a start they should re-negotiate that big-joke Heathrow terminal 5. Their supplier BAA has to get rid of some shops and replace it with some traveller services. It definitely needs more security boots to help passengers through and more escalators and more staff and more lifts.
- Steveo, London, 09/02/2009 21:49
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I really don't recognise the airline that is described by many of your readers in some of the comments made. I fly BA regularly and I thinkit is a super airline. In my experience, the staff are professional and friendly and the service on board is certainly amongst the best. I have flown most of the worlds' airlines and BA is amongst the best, certainly the best of Europe's flag carriers.
I really get tired of 'Britain BAshing'. It is so tiresome and has such a negative effect on the moral of UK Plc and those people doing such a sterling job in its successful companies, like those working at BA for example. I suspect most of the people bleating about BA travel on it very rarely, and when they do, expect uprades and other special treatment that they haven't paid for.
BA, like many large organisations, has its shortcomings. As a regular customer, I think it is a great airline.To its disenters, I urge them to fly Ryanair, Easyjet, Air France or Lufthansa. I hope they enjoy the experience!
- Robert Early, Berlin, Germany, 09/02/2009 14:33
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There staff attitude is awfull, when u travel BA it seems like they are the one doing you the favour, there cabin crew need some customer service training and then perhaps that could go some way in justifying there high fares, i travelled Singapore air recently and they could teach BA how to look after there customers.
- Brian, Wiltshire, 08/02/2009 13:36
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For all my business and personal travel I personally request that they do not book me using BA. Their fares are exorbitant, the service is poor and staff attitudes on the aircraft blunt and rude. First and Business class seats often seem to be unoccupied and it seems BA are cutting their own throats by not reducing their First and business class seating and increasing the economy section where most of the passengers are located anyway. How many millions have also been wasted and spent developing and buying those improved new seats for First and business class passengers which are unoccupied.
- Peter Noterfed, Paris, France, 08/02/2009 04:00
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In my experience it seems to be mainly BA staff who enjoy the benefits of buisness class travel
- Maddie, Surrey, 07/02/2009 10:09
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The Business Class cabin should be ripped out and the aircraft should be made solely tourist class configuration only. This will not erase the debt but would surely help minimize it.
- Roger Allen, St.Albert, Alberta, Canada, 07/02/2009 05:35
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I have just booked return flights with BA to Zurich for the end of the month.
My reason was purely financial. BA offered the cheapest flights.
People are fooled by the budget airlines so called cheap flights. It isn't the headline price that you pay at the end. Check the total cost of your flights and you will see that BA can work out cheaper, especially at short notice.
Anyone complaining about the service they receive from BA should try flying Ryanair to see the contrast. But only take hand luggage as you will be charged £28.50 for pre-booking your luggage in the hold and double that if you turn up at the airport with a bag that they decide is too big for hand luggage.
- Andrew W1, London, 06/02/2009 21:54
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Try and get through to them on the phone when there is a dusruption. Impossible. Every time you go to self-service check in at Terminal 5, there is almost as many staff hanging round as there is kiosks? Why?
- Jim Jones, glasgow scotland, 06/02/2009 21:29
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TW from Dublin is absolutely spot on. I negotiated at check in with Qantas en route to Heathrow on the basis of any extra cash from me makes the flight more profitable. They listened and all parties were happy. Alas the arrogant idiots at BA never seem to get it right. Complacency it seems starts at the top!
- Gareth, Farnborough, Hants, 06/02/2009 21:26
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Dreadful airline. I've been studiously avoiding them for years.
- Mel Barrows, Tenerife. Canary Islands., 06/02/2009 19:32
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Sell Waterside and move your offices to a hangar. Get rid of the shops inside the offices and deliver the airline meals to the staff for their lunch.
Cut costs cut prices and fill planes. get rid of the Staff Pension Fund defecit.
Get Walsh to lead the way and cut his salary in half as a gesture moving forward. Ask the staff to join him and give them share options instead.
Any fool knew the dollar was woth more than 50 pence you flew to the usa enough times to find out !!
- Martin Clarke, london, 06/02/2009 19:09
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I have travelled on flights to the far east whose economy classes were packed and business classes virtually empty. It always struck me as bizarre that an airline would rather fly with even a few premium seats empty than lower its prices. For high pricing is patently the only reason why business seats go empty. There really should be some sort of cheap incentive to acquire business class seats - like having to book over 3 months in advance to get over 50% discount on normal fare. Or, offering them at check-in to economy passengers first come first served for at least a 50% discount! Any profit on those seats is better than none, surely!?? Filling two seats at half price is infinitely better than stubbornly selling the same two seats at a "fat cat" four figured fare which then fly empty.
- Tw, Dublin, 06/02/2009 17:42
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Hi Prices for first and business class? so is their economy class some £180 more for three to fly to Antalya Turkey in April, okay they allow 23kg per passenger and against 15kg but that is not worth the extra £180
- John, London UK, 06/02/2009 16:27
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As a frequent flyer BA need to learn that the customer comes first and that they cannot afford to continue with their unfriendly, arrogant and poor quality service. The airline is still run as a nationalised industry i.e. purely for the benefit of its staff who are paid more and work fewer hours than other airlines. Unfortunately, like most pilots, Walsh is not the sharpest tool in the box and needs to be replaced who understands that nothing can engender goodwill more than good service. That way they will recover some of their lost custom which will lead them back to profitabilty. In the meantime I will refrain from using them as much as I can.
- Roger Slade, Winchester, Hampshire, England, 06/02/2009 16:01
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