BA shows green shoots of recovery

6th Aug 2009

British Airways has given its shareholders the first piece of good news this year by reporting an improvement in passenger volumes and fewer empty seats in July. However premium traffic continued to slide as business passengers downsized to economy.

Revenues per kilometre flown rose by 1 percent during the month, the first gain since April, helped by a 3.5 percent gain in economy-class demand.

Overall gains would have been stronger had premium traffic not continued its slide - down 11 percent in the month as business customers downsized to economy.

The airline is also reaping the rewards of capacity cuts, with the planes flying 84.6 percent full – a year-on-year improvement of 3.1 percent.

George Stinnes, group head of investor relations, told reporters that while the summer was now looking good the airline still had no way of knowing how it would fare in September – one of its most important months.


He said: “Underlying volumes and seat factors stabilised during the first quarter and are expected to improve in the peak summer months.”

“People are tending to book much, much later - September is a big month for business travel but with late bookings, its hard to see how that will come across.”

The UK flag-carrier added that yields – average revenue per seat – remained under pressure, while “yield uncertainty continues to make revenue forecasting difficult”.

It said it expected a £450m-£500m reduction in this year’s fuel bill.

BA remains in a stand-off with its cabin crew over proposed pay cuts and changes to working conditions, but talks resume today after a two-week cooling off period.

Unions are demanding that the airline use managers with more seniority to negotiate proposed pay cuts and contract changes.

Unite, which represents 28,000 BA workers, regards the airline’s negotiating team as having insufficient power to strike a deal.

Rumours have emerged suggesting that Willie Walsh, BA’s chief executive, will personally take over negotiations.

BA wants to cut 3,400 jobs and reduce the salaries and allowances of its cabin and ground crews. Unite proposed cuts, including salary reductions, but they were rejected by BA’s negotiators.

Union members have threatened to take industrial action that could ground the airline this autumn if talks remain deadlocked and BA attempts to impose new terms.


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