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BA plummets £150m into the red
Jonathan Prynn, Consumer Affairs Editor26.01.09
BRITISH AIRWAYS admitted this afternoon that it expects to lose £150million this year.
The company is being pushed deep into the red because of the recession and the collapse in sterling.
Shares in BA slumped six per cent, or 8.3p, to 137.9p.
It marks a dramatic decline in the airline's financial health since its half-year results in early November when it said it hoped to make "a small profit".
The airline has been hit by a sharp fall in numbers of high-spending Club and first-class passengers.
There has also been a surge in costs such as European and US airport charges at the same time as the slump in sterling.
In a statement to the Stock Exchange, BA said: "Further economic weakness in January and the outlook for February and March combined with the fall in sterling are impacting on our outlook for the year."
Overall, BA's non-fuel costs are expected to rise by eight per cent, while fuel costs will not fall, despite the plunging oil price, because BA had paid for much of its fuel in advance at higher prices.
The third quarter of the year alone saw a £50million loss, the airline said.
The warning comes on another bleak day for jobs. Corus confirmed it is shedding 2,500 jobs in Britain while Dutch electronics firm Philips and bank ING said job cuts may include British staff.
Administrators were appointed to shoe chains Barratts and PriceLess.
Reader views (10)
BA must have too much "fat". I needed an emergency flight to the UK from Florida and BA wanted $2200 round trip. I ended up picking Air Canada with one stop for $790. Every time I use BA I found no spare seats. A badly managed airline.
- Gc, Boca Raton, Florida
Having been a heavy traveller since the late 1980's I've seen BA go through a few cycles. Sad to say but standards have deteriorated over the least several years, primarily in quality of staff and service delivery. Staff morale is low, ground and air crew have a careless attitude and occasionally downright rude attitude towards customers. They are a victim of their own success. They need to re-focus on fundamentals and make BA the great airline it terms of unbeatable service and reliability it once was.
- K Smith, Watford UK
Although not mentioned above, BA have massive exposure to the 30% fall in the Sterling / Dollar exchange rate.
Many of their aircraft leases are in Dollars so they are having to pay 30% more in leasing costs than a few months ago.
Any airline with similar exposure will suffer in the same way.
- Andrew, London
Not a real suprise. Not exactly "friendly skies" with them anymore. I guess more space available at Heathrow smelly airport again...
- Peteo, Islington, London
As well as everyone's luggage?!
- Roz, Chamonix, France
Why is anyone surprised? Both individuals and business are being squeezed and holidays are becoming low level discretionary spends.
- Dave Davies, Basingstoke
I think BA needs new management. They have been too busy trying to do deals with other airlines and at the same time they have been ignoring their passengers.
- Steveo, London
I used to fly British Airways almost weekly but I also noticed that their service checking-in, on-board etc. has become so and so. They just have too much surly staff and are un-friendly to frequent travellers like myself. In the mean time the other European airlines have improved so much and of course there are now the middle eastern and Asian airlines plus Virgin to give excellent service. Let's see if senior management now gets the message?!
- Jonathan, London
This clearly shows what a foolhardy decision Brown made in announcing his backing for the Heathrow third runway a the time he did. Even if he were for it and even if it was in his mind the proper long-term decision, he could have used declining air travel as an excuse to delay the decision until after the next election. The chances of it ever going ahead seem pretty remote.
- Phil Jones, London UK
British Airways's service levels have dropped over the last 2 years. I guess now they are losing customers.
- Georgie, Islington, London
