BA losses soar

British Airways suffered record pre-tax losses of £531 million for the year ending March 31.
The compares with a loss of £401 million a year earlier and came despite £1 billion in costs being stripped out.
The results do not cover the impact of the April ash crisis and recent cabin crew strike action but takes into account to global economic downturn and a slump in business travel.
Total costs for the year to March 31 were down by almost £1 billion, comprising a £597 million reduction in fuel costs and a £390 million reduction in non-fuel costs.

Passenger revenue for the year was down 10.9% to £7 billion, on capacity down 4.9%. Despite improvement in the second half of the year, yields were down 8%, excluding exchange down 11.4 per cent, BA said.

Staff numbers have been cut by almost 3,800 compared with last March. The manpower savings have come from productivity improvements and have been achieved by natural attrition combined with voluntary redundancy, overtime reductions, part time working and unpaid leave. Overall, since September 2008, the workforce has reduced by more than 6,000.

CEO Willie Walsh said: “Returning the business to profitability requires permanent change across the company and it’s disappointing that our cabin crew union fails to recognise that.
"Structural change has been achieved in many parts of the business and our engineers and pilots have voted for permanent change.
"I would like to thank our staff across the airline for their outstanding loyalty during this demanding period and our customers for their continued support."

"The cut in non-fuel costs has been achieved by the introduction of permanent structural change in the way that we work allied with capacity reductions and cuts in external spend," Walsh said.

He said the current financial year "could hardly have had a worse start" with the unprecedented closures of UK airspace following the eruption of the volcano in Iceland.
"This added to the aviation industry’s current financial woes while highlighting its crucial contribution to the economy.

"We are pleased that the European Commission has agreed that national governments can compensate airlines for the losses incurred. We are not looking for a bail out, only for compensation for the losses caused by the airspace closure which was something completely out of our control.
“In 2007 the Office of Fair Trading had agreed that it would be prepared to resolve its investigation into alleged price fixing between British Airways and Virgin Atlantic under the Competition Act 1998 if certain conditions were met.
"Given the collapse of the criminal trial on May 10 2010, the acquittal of the four defendants, and in light of potential new evidence, we are considering whether the settlement terms the company was offered by the OFT, including the as yet unpaid fine of £121.5 million, remain appropriate.”
Walsh aslo said: "To be in the midst of the biggest economic downturn in 60 years and produce the same operating figure as last year shows the hard work that has been put into steering our business through the recession."

BA chairman Martin Broughton said: “This is our second consecutive year of record losses but we take heart from the fact that, while our revenue has fallen by £1 billion, so have our costs.

“While the outlook is becoming slightly more positive, we urge the Government to reconsider its plans to tax the aviation industry, which already more than pays its way in taxation, isn’t used as a convenient source of public sector funding through increased taxes.

"The industry is vital to the UK economy and the travelling public as the airspace closure indicated yet we have a larger, and increasing, tax burden than other transport sectors."