Not Enough Savings For Current Fiscal Year

British Airways (BA) announced Friday that their cost-cutting measures will not save the airline from posting a record loss at the end of their fiscal year in March.  BA reported that their 10.5% cut in operating costs was overshadowed by a 12.9% fall in revenue during the past nine months.

The airline reported an operating of loss of $135 million, compared to a profit of $139 million a last year.  BA also reported that premium traffic volume dropped by 9.7% including 2.1% in January alone. The losses were still better than financial forecasters had predicted.

"While we are on the right track, we still expect to make record losses this year," said Chief Executive Willie Walsh. "Permanent structural change is being introduced in all areas and will return us to sustained profitability."

BA is currently facing a potential strike by cabin crew, a pension deficit, stiff competition, and fluctuating fuel costs.  As ANN reported earlier, the airline has been in a dispute with cabin crew over issues including frozen wages, job cuts and crew downsizing.  The Unite union has called for a strike and is currengly engaging BA in a court battle over new schedules for crew members.

In November BA announced their intent to merge with Spain's Iberia airline and proposed a joint venture with American Airlines.  Both of these moves are seen as having potential to increase revenues the airlines as a group.

FMI: www.ba.com