BA plunges to record loss

Struggling airline British Airways' (BAY) slumped to a record loss in the first half of the financial year as the recession continues to wreak havoc on the aviation industry.
 
The airline's losses before tax swelled to £292 million for the six month period ended 30 September, while its operating loss hit £111 million, in stark contrast to the £140 million profit it reported in 2008.
 
The disappointing figures mark the first time BA has posted a loss during the first half of the financial year.
 
Revenue fared little better, slipping almost 14% to £4.1 billion with falls in the number of lucrative business class passengers delivering a heavy blow.
 
British Airways's chief executive Willie Walsh blamed the financial crisis for the results: "Aviation remains in recession with IATA predicting that the industry will lose $11 billion this year. The global airline industry is facing continued pressure on yields highlighting a significant shift within the industry."
 
As a result of the record losses, BA said no dividend would be paid out for the interim period.
 
However, Walsh said the airline had responded at speed to the crisis and managed to drive down costs by over 5%. With the British airline's revenue likely to drop £1 billion lower this year, it has little choice but to embark on further cost reduction plans, he conceded.
 
BA's summer schedule has already been reduced by 3.5% and its manpower has been slashed by 1,900 through reduced overtime, increased part time working and targeted voluntary redundancy. The airline now plans to drop winter capacity by 6% and axe a further 3,000 jobs.

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Following a bitter court battle, British Airways said it will charge ahead with changes to cabin crew in mid-November and urged union Unite to withdraw its plan for an industrial action ballot and instead channel its efforts into helping the troubled airline "secure long-term profitability."
 
In turn, the British airline has turned its attentions to sealing its position among corporate flyers. It recently launched its London City - New York all-business flights and said so far passenger numbers had exceeded expectations. British Airways will also launch six new leisure routes this winter.
 
After facing a barrage of criticism at the time of its opening, British Airways maintained that Terminal 5 at London Heathrow continued to reap benefits after its infamous baggage difficulties were resolved and went on to score "high customer satisfaction ratings."
 
Despite the disappointing results, investors chewing over the news on the Interactive Investor British Airways discussion board were in two minds as to whether British Airways could bounce back.
 
The Darkyhorse commented: "Reasonable results considering. Operating loss better than generally forecast. Merger details, if they come, could catapult this. Interesting day ahead!"
 
NoQuestionMarks, however, took an altogether more subdued approach to the airline's results: "Are the worst half year results in history really something to shout about? It's debt that's murdering BA and those debt charges are crippling. I'll be staying well clear until something positive happens at BA."
 
The airline's share price rose almost 6% to 197p following its results.