British Airways PLC (BA) reported yesterday a record operating loss of £94 million (US$155.5 million) for the first quarter as people cut down on travel amid the recession, and said there were “no visible signs of improvement” in the market beyond a seasonal up-tick for the summer.
BA pledged to continue its focus on stripping costs out of the business. It said expenses, debt and the fuel bill were all down over the first quarter.
The loss posted by the airline, which is seeking to trim costs by cutting 3,700 jobs and freezing pay, compares with a £35 million profit a year earlier.
PHOTO: AP
It is the first time since the company was privatized in 1987 that it has recorded a deficit at the beginning of the fiscal year.
Revenue in the current first quarter fell 12 percent to £1.98 billion, from £2.25 billion.
“Trading conditions continue to be very challenging with underlying revenue down 16.8 percent and no visible signs of improvement,” BA chief executive Willie Walsh said in the trading update. “While traffic volumes are down considerably compared to last year, they have stabilized during the quarter and show some signs of improvement for the peak summer months.”
Walsh said that efforts to cut costs were bearing fruit, with costs down 6.6 percent over the quarter.
“But with revenue still weak, there is much more to be done,” he said.
BA has already stripped capacity out of its flying schedule, with plans to park 22 aircraft over the winter. It has also extended its planned delivery of six new Airbus A380 aircraft by an average of five months. A second tranche of the aircraft will be delayed by an average of two years.
Meanwhile, Air France-KLM on Thursday reported a bigger-than-expected net loss of 426 million euros (US$598 million) in the three months through June as premium class travel and its cargo business continued to take a battering.
The loss announced by Europe’s biggest airline group in its fiscal first quarter compares with a 168 million euro profit a year earlier.
“Global economic activity has stabilized at unprecedented low levels, leading to a sharp decline in volumes and unit revenues,” the airline said in a statement. “The airline sector has been particularly affected.”
The company confirmed that revenues fell 20.5 percent to 5.17 billion euros.
The quarter was marked by the deadliest plane crash in Air France’s history. Flight 447 from Rio de Janeiro to Paris went down over the Atlantic Ocean, more than 1,450km off Brazil’s northeastern coast, on June 1. All 228 people aboard the Airbus A330 died.
Looking forward, Air France-KLM said it expects its passenger business to deteriorate in the second quarter, although at a slower pace than in the first. In the second half, the airline is hoping for a stabilization in both its passenger and cargo business, based on the current economic outlook.
It will ground an extra four freighters this winter to further reduce cargo capacity, for a total reduction in its cargo fleet of 10 aircraft.
Separately, All Nippon Airways, Japan’s second-largest carrier, announced yesterday a net loss of ¥29.2 billion (US$306 million) for the quarter to June, hit by the recession and worries about swine flu.
The red ink compared with a profit of ¥6.6 billion in the same period of the previous year. The group logged an operating loss of ¥42.4 billion, swinging from a year-earlier profit of ¥14.6 billion.
Revenue tumbled 21.9 percent to ¥269.8 billion.
“The business environment was extremely severe,” senior vice president Eiji Kanazawa told reporters.
“Demand for flights slowed down quickly due to the recession and the outbreak of a new type of influenza. The fate of the global economy remains uncertain. But we still expect to enter a recovery phase in the second half,” he said.
It plans to reduce unprofitable services, offer unpaid leave to more employees and end free newspapers for passengers in economy class as part of a package of measures aimed at boosting revenue by ¥30 billion this year.
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