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British Airways has plunged £401 million into the red, its worst performance on record. The airline's crash comes despite 20,000 job cuts in recent years and 2,500 in the last 12 months.
Under-pressure chief executive Willie Walsh said current trading was the harshest ever and the outlook was bleak. He is looking for further job cuts and said 16 aircraft would be mothballed Having already opened talks with trade unions, Mr Walsh has slapped a pay freeze on BA staff and told them they can go on unpaid leave or switch to part-time working.
City analysts predict that the crisis will see the end of BA's independence, hastening it into a defensive merger with Spanish carrier Iberia and into a transatlantic alliance with American Airlines.
The depth of the problem at BA is highlighted by the fact the £401 million loss comes only 12 months after it reported a record £922 million annual profit. BA carried 1.5 million fewer passengers last year at 33.1 million and recent trading figures indicate the falls this year are going to be worse.
BA's woes, however, could be good news for passengers. Mr Walsh indicated the airline had switched from trying to attract high-end passengers flying on expensive tickets in business and first class, who contribute most to BA's profits.
Instead Mr Walsh said he was now prepared “to chase volume” or offer cut-price tickets to keep as many people flying BA — rather than easyJet or Ryanair — as possible. Mr Walsh blamed BA's woes on the economy. “The prolonged nature of the global downturn makes this the harshest trading environment we have ever faced,” he said.
James Hughes, analyst at CMC Markets, said: “As was widely expected BA posted a thumping loss, reflecting the calamitous state of the global economy. No dividend, capacity cuts and job lay-offs are set to follow in the coming months.”
Reader views (14)
Ba is the most pathetic airline ever. They are rude and treat their customers like dirt. You would think they were the ones paying us to fly rather than the other way around. If they want to make money I suggest they do one than cutting their prices. They also need to ensure their staff are polite and otherwise ensure we can make complaints about the ones that aren't. Lastly it shouldn't only be flights to europe that should be reduced flights to other continents e.g africa, australia, asia etc should be reduced as well. That would ensure that people do not pick virgin atlantic over BA because that airline is better by far! Go Branson!
- Mee, london, 25/05/2009 02:44
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This is probably a very clever move. Declared Profits have little to do with the health of the business as has been proven over and over again. Cash is the issue. If you want to preserve cash, which surely you have to do in times like these then stem the outflow by ensuring that the Corporation or other taxes that you have to pay are minimised or negated altogether. Surely in this situation all companies bring the 'skeletons out of the cupboard' The last thing they want to do is to place precious cash in the hands of the Government. What have they got to lose as no one expects miracles in the Net Profit After Tax Department except the City Slickers!
- Pedro, Dubai UAE, 22/05/2009 15:15
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Having recentley done a coach share between BA and Qantas to Australia I will never fly BA again. The service and standard of the food and craft on BA was woeful and having not heard from them after making a complaint I wonder why customers are flying other aielines. I have nothing but great things to say regarding my flight with Qantas who looked after you all the way.
- Michael, London, 22/05/2009 14:06
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Georgie, Islington, London
Ryanair/Easyjet onboard staff are arguably far better than BA largely, I suspect because of the disillusion and disaffection working for a company that treats its customers with the same infra dig it treats its staff !
If this hatchet man remains in control, and his only answer to problems of his own making is more and more cuts, the problems will simply deteriorate further to the point that BA's very future is threatened.
Presumably BA shareholders do not want that to happen ?
- John Bloomfield, Twickenham, 22/05/2009 13:46
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.. and what will it take to get rid of Willie Walsh? How much will he get as a pay-off and what pension rights will he have after making such a hash of BA? Don't tell me, he will apologise and then everything will be okay. He must be a member or friend of the Labour Government as everyone is trying to be as useless and mediocre as doom & bust Brown to see if they can lose anywhere near £160,000,000,000.oop while receiving a large departing payment as a reward!
Rid Great Britain of mediocrity and get people who 'can do'. Put an end to Bull-Sugar Honey Iced Tea beats brains!
- Joe, Thornton Heath, UK, 22/05/2009 13:40
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I must agree with the others. BA's service standards have deteriorated remarkebly over the last few years. I miss the friendly and helpful stewardesses from the old times. Shame on BA.
- Steveo, London NW1, 22/05/2009 12:50
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Well they started to lower their service levels at the time that most other full-price airlines were improving their service. That is the problem and one of the Walsh's biggest miscalculations: you cannot be Ryanair-arrogant and charge old BA prices at the same time. Especially on-board BA staff is just not service-oriented!
- Georgie, Islington, London, 22/05/2009 12:39
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The prices are too high, customers will go elsewhere, What did they expect in these tough times when the cost of its flights is nowhere near its competitors.
I have said it before BA have useless managers on board
- Mr S.Port, London, 22/05/2009 10:30
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Steck, who do you think owns BA exactly? Hint: It's not publicly owned.
- Nj, London, 22/05/2009 10:04
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Good to see these highly remunerated executives seem capable only to apply the 'cost cutting' tool to improve profitability. It will be a great day when executives consider the quality of services their companies provide, because even in the 'boom' (sic) years all they offered was cost cutting to improve the illusion of success
- John Bloomfield, Twickenham, 22/05/2009 09:30
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BA is currently losing £4m a day. The question is, would you keep the company running if it were private ???
- The Steck, Reading, UK, 22/05/2009 09:24
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Its probably due to carrying all those gree"n shoots" rather than paying business and leisure passengers.
- Dave Davies, Basingstoke, 22/05/2009 09:22
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They brought most of this on their own head with their were BA !! attitude. I travel often, in the offshore oil and gas industry and employ a number of engineers also, we recently had a large contract in Bangkok which required the purchase of a large number of business class seats over a two year period. On comparing costs we discovered that Emirates and Etihad were almost fifty per cent cheaper than BA, new planes full flat sleeper seats. As im British i contacted BA to query the huge price disparity, reply ; WE NEVER COMPARE PRICES !! ; result the loss of both my revenue for the contract and with impeccable service from the Arab airlines the relegation to ; USE BA AS A LAST RESORT ; sorry BA your attitude and that of your staff created the mess your in rather than the usual ;DIFFICULT TRADING AND FUEL COSTS ; on which BA, with regard to fuel surcharge, charges more than any other airline, you need to wake up and smell the coffee.
- Alan Davey, London UK, 22/05/2009 09:20
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With fuel costs set to rise and a very unlikely rebound on premier travel - no company can justify it in the face of conference facilities etc for internal meetings especially. This coupled with the final advent of the high speed rail programme to the UK I think BAs current business model is broken badly.
Its obsession with Hub Airports when all evidence is that all European Flights would rather be local than central makes an absolute mockery of the concentration at Heathrow - which itself is making a poor service even worse.
Add to the shockingingly poor management strategy the vy vocal anti expansion lobby which will at the very least embarass many companies to stay away from Heathrow and the busted flush that is BAA and I think BAs prospects like most airlines are pretty poor. Not a place to invest really - now Trains thats a place to invest.............
- Christian Ball, London, UK, 22/05/2009 08:38
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