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Willie Walsh, the chief executive of British Airways, this morning announced an 88 per cent fall in pre-tax profits for the three months to June in what he described as "the worst trading environment the industry has ever faced".
He blamed mounting fuel costs, which have doubled in the past year and pushed costs up 49 per cent to £706 million for the quarter to June 30, 2008. Profit before tax was £37 million in the first quarter, down from £298 million in the same period last year. Revenue was up 2.8 per cent to £2.25 billion.
Mr Walsh said this morning: "We expect our fuel bill to top £3 billion this year - the equivalent of more than £8 million a day. The combination of unprecedented oil prices, economic slowdown and weaker consumer confidence has led to substantially lower first quarter profits."
He said British Airways is well prepared and has adapted its plans in the event of further economic uncertainty. He pointed to a greater focus on cost control and a reduction in capacity in the airline's winter schedule.
Mr Walsh added that discussions regarding a merger with Iberia are under way, adding that the deal would lead to increased efficiencies and synergies.
"It will be several months before talks are finalised but we are confident of securing regulatory approval," said Mr Walsh.
British Airways said its financial position remained strong despite the weak quarter, with just under £2 billion in cash, up £91 million since March and net debt was £1.1 billion, £206m lower than at its year end.
The airline added that there had been more than six million passengers through Terminal 5 since March 27.
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I would like to know which are the 10 Carriers that fly to the USA out of a BAA airport on most American routes. That is certainly not true !
There might be 120 airlines that use Heathrow, but BA is by far the largest of any carrier to use the airport. Would suggest you take a look again.
Tony, London ,
Why would any airline need to have a full years fuel costs and running costs ? We usually pay for flight well in advance of our travel dates, so with BA having more then enough cash to cover its debts and then have £900 million over, not to mention its assets.
Tony, London ,
If you think BA is expensive then try and get a last minute flight on Ryanair - where you pay for everything. I usually find there are flights available on BA for less than £120 return to Stockholm on BA, where as on Ryanair you would expect to pay £120+ one way.
Tony, London ,
Susie
Hardly comparable BA / Iberia to the BAA, Iberea and BA are each one of 120 airlines that use Heathrow and on most American routes there is the choice of 10 or so carriers, there is only one BAA ( as in Monopoly or Zero Competition), if airlines dont like the terms it seems to be tough luck
Peter, Aldershot, UK
Whats going on here ? BA has been fixing prices and putting a fuel surcharge on tickets well before the current oil price rise. So where has all that money gone ? As it is BA is not the cheapest. Perhaps what is needed is a change in management and attitude in this lumbering behemoth of an airline
John Taylor, London,
So £2 billion cash reserves is not even a year's fuel bill let alone running costs. Run away.
bob, london,
Willie blames everything except himself.
BA gambled - and, entirely predictably, lost - on the Boeing 787 being delivered on time, so has an unmodernised fleet of airliners, that are guzzling expensive fuel. Bum management by a whiz-kid executive, like so much else thar afflicts our flag-carrie
Noel Falconer MEcon, COUIZA, France
The combined airline would be Europes largest by passenger numbers, carrying over 60 million people a year and employing 64,000. I wonder will BA be calling for an inquiry by the OFT as it did when it called for the break of of BAA dominance in the market. Will there be a submission to the OFT
susie, London, UK
August 2006...BRITISH AIRWAYS yesterday added to the pressure for BAA to be broken up by urging separate ownership of Heathrow and Stansted and calling for the airports market to be referred to the Competition Commission. BA is the biggest of several airlines to call for BAA to be overhauled.
susie, L:ondon, UK
"It will be several months before talks are finalised but we are confident of securing regulatory approval," said Mr Walsh. Really I wonder will other airlines vigorously appose this merger, will BA appose it lol! as it would be too dominant in the market, the accusation that BA fired at BAA
susie, London, UK