British Airways' Forced to Slash Costs after Suffering 170 Million pound Net Loss
Tuesday, February 10, 2009: British Airways will be forced to slash costs after suffering a net loss of 127 million pounds in the nine months to December 31, 2008, compared with profit of 642 million pounds in the same period of the previous fiscal year.
“These results have been hit by further economic weakness and the fall in sterling," said BA Chief Executive Willie Walsh.
The company added that it was in talks with trade unions about efficiency measures after group costs ballooned to 7 billion pounds, an increase of 1 billion pounds from the comparable period.
BA´s fuel bill surged almost 50 percent to 2.244 billion pounds, despite slumping crude oil prices, reflecting the collapse of sterling against the US dollar.
"We have opened discussions with the trade unions about pay and productivity, which is required to improve the financial performance of the company," BA said without giving any further details.
BA has also confirmed that it will be increasing job cuts and reviewing pay in an effort to pare spending.
In the nine month period, British Airways reported an 88 percent drop in operating profits to 89 million pounds, compared with 744 million pounds in the comparable period.
In January, BA had issued a profits warning that it expected to post an annual operating loss of about 150 million pounds in the current financial year which runs until the end of March 2009.
BA shares rose 5.56 percent to 134.70 pence in early Friday morning trade on London´s FTSE 100 index of leading shares, which was down 0.08 percent at 4,225.62 points.