BA Post Biggest Loss For Over 20 Years
British Airways has today announced its biggest loss for over 20 years, posting a £401 million loss before tax for the year to 31st March. BA made a revised profit of £922m in the previous year.
Although revenues increased to almost £9 billion, it is the biggest loss that the carrier has reported since its privatisation in 1987, prompting chief executive Willie Walsh to state that there were "no signs of recovery anywhere".
In 2008, fuel prices rose by 44.5%, accounting for a £3 billion fuel bill, whilst a weak pound against the dollar only served to raise the costs even more as fuel is bought in US dollars.
Willie Walsh said: “The prolonged nature of the global downturn makes this the harshest trading environment we have ever faced and, with no immediate improvement visible, market conditions remain challenging".
The operating loss of £220 million was worse than the £150 million loss predicted at the start of the year, whilst the total number of passengers fell 4.3% to 33.1 million as demand for premium travel fell significantly. British Airways have confirmed that the tough outlook for the airline industry would force them to reduce capacity by 4% over the winter and ground 16 aircraft. However, lower fuel prices for 2009 are expected to help reduce BA’s costs by about £400m in the year ahead.
The above results also included £78 million of redundancy related costs as cut more than 2,500 jobs since summer 2008. BA shares dropped 7% to 151.6 p in this morning’s trading.
