British Airways... that stupid airline which disrespected Nigerians... is in financial trouble and it is a delight!
British Airways Reports Record Loss Of $485 Million
2009-11-07 16:08:48 (2 days ago)
http://freeinternetpress.com/story.php?sid=23494
Posted By: Intellpuke
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British Airways plunged to a record pre-tax loss of £292 million ($485 million) over the past six months, traditionally its most profitable trading period, as the airline fights to stave off Christmas strike action that will deepen its financial woes.
British Airways chief executive, Willie Walsh, warned BA's 38,690 staff that the airline's worst first half results since privatization made further cost reductions "essential".
Britain's high court failed to award an injunction against BA cost-cutting measures Thursday, but the UNITE trade union, which is attempting to halt reductions in cabin crew levels, vowed to press ahead with a strike ballot that could bring the airline to a halt from December 21 onwards.
British Airways underlined how far its business model is out of kilter with its cost base this morning as it reported a pretax loss of £292 million in the six months to September 30, compared with a profit of £52 million ($86.4 million) for the same period last year.
The airline is now losing £1.6 million ($2.6 million) a day after failing to generate enough revenue during the usually profitable summer months - a key period for all airlines.
(story continues below)
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Revenues fell by 13.7% to £4.1 billion, in line with a deep reduction in fares as BA scrambled to maintain demand from passengers, including the all-important business class customers who generate the majority of its profits.
However, overall costs outstripped turnover at £4.2 billion ($6.9 billion) and the loss was deepened by pension and finance costs.
Walsh said the airline industry remained in dire straits and cited forecasts by the International Air Transport Association (IATA) that carriers will lose $11 billion (£6.6 billion) this year despite declining fuel prices.
The BA boss earned the moniker "slasher Walsh" when he turned around Irish carrier Aer Lingus with a brutal cost reduction program and signaled another budget crackdown over the next six months.
"It's imperative we continue to deliver on our plans to reduce costs further in the second half," he said. "With revenue likely to be £1 billionn lower this year, we can't stand still and further cost reduction is essential."
Walsh believes the worst declines in passenger numbers are over - customer numbers fell by 469,000 to 17.7 million over the period - but warned that the industry was still in recession with no sign of "green shoots" yet.
Job Cuts Ahead
BA said it intends to cut a further 3,000 jobs over the next six months, including the equivalent of 1,700 cabin crew with the rest to come from international employees and ground staff including check-in desk workers. Around 1,900 employees have left the airline since April. Staff represent BA's second biggest cost after fuel, accounting for about a quarter of expenditure, but attempts to wring cost savings from the airline's 14,000 cabin crew have descended into acrimony.
The UNITE union, which represents the majority of flight crew, is holding a ballot on proposals to cut crew on long-haul flights from 15 to 14 and warned yesterday that it expects a "resounding" yes vote.
The last industrial dispute between BA management and cabin crew cost the airline £80 million despite a last-ditch agreement that avoided a walk-out. However, the 11th hour deal came too late to prevent thousands of customers from booking elsewhere after BA canceled flights in advance of looming strikes.
BA said it is still locked in merger talks with Iberia, the Spanish national carrier, and is seeking approval from authorities in Washington and Brussels to form a close alliance with American Airlines that will allow both carriers to collude on fares and schedules - a move vehemently opposed by Sir Richard Branson's Virgin Atlantic carrier.
The Iberia and AA talks assumed greater urgency last year when BA recorded a pre-tax loss of £401 million.
A marked deterioration in business class bookings following the collapse of Lehman Brothers last September prompted Walsh to warn that BA is in a "fight for survival" and it is understood that executives became seriously alarmed about the airline's predicament earlier this year.
However, those fears were allayed in July when BA raised £680 million by persuading trustees of its pension fund to forgo £30 million in guarantees and issue a convertible bond.
The airline now has a cash pile of £1.5 billion, which analysts say should be enough to see it through the recession.
BA's pension fund remains the airline's biggest long-term problem nonetheless, with a projected deficit of about £3bn that will prove impossible to plug unless the carrier returns to long-term profitability.
Intellpuke: You can read this article by Guardian transport correspondent Dan Milmo, reporting from Manchester, England, in context here:
http://www.guardian.co.uk/business/2...ys-record-loss 
UAL Flies to Nigeria 
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