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Profits plunge at British Airways

2008-11-07 13:23:42

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BA chief executive Willie Walsh on 'bleakest trading environment ever'

Half-year profits at British Airways have fallen 91.6%, with the airline blaming "incredibly difficult trading conditions" for the plunge.

BA said pre-tax profit totalled 52m ($81.6m) between April and September, down from 616m a year earlier.

Willie Walsh, BA's chief executive, said the period would "be remembered as one of the bleakest on record".

Airlines have been hurt by record fuel prices and the economic downturn is hitting passenger numbers.

"The industry continues to face very difficult trading conditions on the back of a weak economic environment," Mr Walsh said.

However, he was confident that the airline would be able to make a "small profit" for the financial year.

The profit forecast encouraged investors and BA's share price was up 15.6%, or 20.30p, at 150.8p in morning trade.

Flights cut

The airline said it would reduce its number of flights by about 1% in 2009 in anticipation of less demand from travellers.

The reduction includes the suspension of services from Heathrow to Dhaka and Kolkata, and Gatwick to Dublin and Zurich.

BA said that its fuel costs were 52% higher than a year ago, although it said it was well placed to benefit from the current fall in fuel prices.

Aviation fuel prices move in tandem with crude oil prices, which have more than halved since hitting a record $147 a barrel in July.

However, BA added that hedging and a weaker pound would offset lower prices to some extent.

Low-cost rival Ryanair also reported a sharp fall in profit earlier this week.

Mr Walsh said that Heathrow Terminal 5 was now running smoothly after a disastrous opening earlier this year.

He also said a third runway for Heathrow was "critical" for the future of the UK economy.