22 May 2009

British Airways profits take huge dive

9:19 pm on 22 May 2009

British Airways has announced the biggest loss since the company was privatised in 1987.

Europe's third biggest airline by revenue made an operating loss of Stg 220 million, compared with a record profit of Stg 875 million in 2007-08.

The company reported a loss before tax of Stg 401 million for the year to 31 March, after seeing its results hit by a weak pound and higher fuel costs. It made a revised profit of Stg 922 million in the previous year.

Although revenues increased to almost Stg 9 billion, BA faced a fuel bill of nearly Stg 3 billion. Chief executive Willie Walsh said he saw "no signs of recovery anywhere", the BBC reports.

Fuel costs rose 44.5% after the price of oil soared last year. The weaker pound also contributed to rising costs as fuel is bought in US dollars.

The results included redundancy-related costs of Stg 78 million.

BA said it had cut more than 2,500 jobs since last summer and added that it was in talks with unions about "pay and productivity changes".

The total number of passengers carried fell 4.3% to 33.1 million.

BA said the outlook for the airline industry was tough and it would not be paying a dividend this year.

It plans to reduce capacity by 4% over the winter by parking up to 16 planes.