BA reports unprecedented loss

BRITISH AIRWAYS   OPERATING REVENUE    PRICE FIXING

Global - British Airways (BA) announced the biggest loss in its 22-year post-privatisation history and further predicts that revenues will slump by £1 billion (US$1.66 billion) in the current financial year.

BA's revenues for the six months to September declined 13.7%, with operating losses amounting to £111m and pre-tax losses of £292 million.

"The numbers are very much in line with expectations in terms of trading conditions, the economic environment and the financial performance... we see very clearly that things are not getting any worse, but there is no evidence of things getting any better either," Willie Walsh, CEO of BA said.

Besides predicting that revenues could nosedive £1 billion for the fiscal year 2009, the company could also rake up losses exceeding last year's unprecedented £401 million, said Walsh.

"With [BA] revenue likely to be £1 billion lower this year, we can't stand still and further cost reduction is essential," Walsh said.

Earlier this year, the airline decided to scrap all free meals apart from breakfast on its short-haul flights, in an effort to help reduce overheads, Channel News Asia reported.

According to the Independent, BA has cut operating costs by 8.7%. The equivalent of 4,900 pink slips will be handed out this financial year, with some 3,700 through a combination of reduced overtime, part-time working and voluntary redundancy. To date, 1,900 positions have already been axed in the UK, with another 3,000 targeted by March 2010.

BA will also pay a US$4.2 million fine under a ruling by a Canadian court for its participation in a cargo price-fixing cartel between 2002 and 2006. 

The ruling by a federal court in Ottawa is part of a series of investigations by various watchdogs in the industry affecting numerous freight carriers.

"The fines obtained as a result of our investigation into the air cargo price-fixing conspiracy reflect the serious nature of this behaviour," said Melanie Aitken, Canadian commissioner of competition.

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