British Airways suffers record full-year loss

[May 22, 2009]  LONDON (AP) -- British Airways on Friday reported its biggest full-year loss since the former national airline was privatized in 1987, mainly due to soaring fuel costs and weaker demand in recent months.

The company lost 375 million pounds ($595 million) in the year ending March 31, compared with a profit of 712 million pounds in the previous year. That is its worst result in over two decades of business, the previous low point being a 200 million pounds loss in 2001-2002.

British Airways consequently said it would not pay any dividends to shareholders or bonuses to managers for the year.

"The prolonged nature of the global downturn makes this the harshest trading environment we have ever faced and, with no immediate improvement visible, market conditions remain challenging," said Willie Walsh, the airline's chief executive.

Revenue rose 2.9 percent to 8.99 billion pounds during the fiscal year, but fuel costs jumped 45 percent to 2.97 billion pounds.

In its fourth quarter, British Airways said revenue slumped by 8.4 percent to 1.9 billion pounds, resulting in an operating loss of 309 million pounds. Full figures for the quarter were not disclosed.

The company offered no guidance for the half year or full year "because of the difficulty in forecasting revenues."

BA shares were down 9 percent at 148.1 pence on the London Stock Exchange.

"Levels of traffic volume and yields have not improved over the last quarter and any recovery may take longer than expected," said James Cooke, analyst at Panmure Gordon & Co. He rated the shares as "hold."

"The industry as a whole is facing extremely difficult times, but for some BA is seen as being as well positioned as it can be in the circumstances. With this in mind, the market consensus is a very cautious buy," said Richard Hunter, analyst at Hargreaves Lansdown Stockbrokers.

There was "no question" that staffing numbers would be cut, Walsh said, but gave no details. The airline booked a charge of 78 million pounds for paying staff who were laid off during the year.

He said BA was switching focus from premium traffic, which has fallen by 13 percent, to competing for lower-fare volume business.

"Significant pricing actions were required to stimulate non-premium traffic volumes, which were broadly unchanged year on year," the airline said.

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[Associated Press; By ROBERT BARR]

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