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Beleaguered British Airways boss Willie Walsh faced increasing pressure from the City today as he told investors that it was impossible to forecast revenues for the rest of the year.
As expected BA recorded a first-quarter loss for the first time in its history reporting a swing from profits of £37 million to losses of £148 million in the three months to end-June. But that was considerably worse than most City forecasts. Underlying revenues dropped 17%.
Walsh said: “The industry continues to face very difficult trading conditions with considerable uncertainty over the likely timeframe of the recovery from the global economic downturn.”
BA's losses come in the same week that Air France-KLM. Lufthansa and Singapore Airlines reported huge losses but low-cost carriers Ryanair and easyJet remained in profit.
Walsh said: “Underlying volumes and seat factors have stabilised during the first quarter and are expected to improve in the peak summer months. Yields will be under pressure from the year-on-year impact of lower fuel surcharges, exchange movements and the mix of business and leisure passengers. Yield uncertainty continues to make revenue forecasting difficult.”
BA is raising £680 million from the City and today announced that it will cut capital spending by a fifth this year from £725 million to £580 million largely by delaying new aircraft deliveries.
Walsh said he still wants to merge with Spanish airline Iberia and had recently held a “constructive meeting” with its management.
Reader views (6)
If the major international airports in the UK are anything like that of the Netherlands (Schiphol), then I'm not at all surprised that fewer people are flying. The increase in airport taxes has hit families the most. If I want to fly from Amsterdam to New York, the tax is almost equal to the bare ticket price, between €300. to €400.00! If the UK had a good government, they would do something about the high taxes to encourage more people to fly. Most likely BA will soon get a large hand-out from The Bank of Gordon Brown to keep it going. That money will probably come from the pot of "High Airport Taxes" that were in the first place unfairly milked from passengers. This BA loss could have been prevented by the government, had the government acted earlier this year by decreasing the unfair taxes on passengers. The same would apply to the unfair tax on smokers, yet they complain of loss of revenue due to smuggling, I rest my case.
- Stevie, Haarlem Netherlands, 02/08/2009 21:43
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Walsh has to go, he is not up to the job
- Edwin, beaconsfield buckinghamshire, 31/07/2009 22:16
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Walsh was a mistake from day 1. He sold the BA budget airline 'GO' at exactly the wrong time. Clueless about handling BA staff and also gave FLYBE a monoploy on some key domestic routes. BA could and should be a fantastic British company but Walsh must be shown the emergency exit without delay - he is not the man for this job.
- Anthony Bass, Southampton, 31/07/2009 17:04
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The BA service has dropped down the drain. They are not good anymore.
- Georgie, Islington, London, 31/07/2009 13:16
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Darren of Newham. BAs new route from City to JFK is being underwritten by a major bank and wont cost BA a penny. Get your facts right
- Rt, London, 31/07/2009 12:34
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Its time for Willie to go. He really has lost control of BA. Staff working for free and pay cuts all the while they continue to plough ahead and spend hundreds of £millions and launching a 38 seater route from London City Airport to JFK. They claim the LCY route is for people who work in the city and is essential for financial stability. Yet it lands in JFK which is not 10 minutes from Wall Street. Its just another example of the shocking inconsistancies running through the management of BA.
- Darren, Newham, 31/07/2009 09:50
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