British Airways posts Q1 loss of $190 mln

[July 30, 2010]  LONDON (AP) -- British Airways PLC on Friday said its losses widened 15 percent to 122 million pounds ($190 million) in the three months ending June 30 as operations were disrupted by cabin crew strikes and a cloud of volcanic ash from Iceland.

However, the airline said that underlying revenue increased and it achieved further cost reductions. Chief Executive Willie Walsh said he still expected the carrier to break even for the full year.

For the three months, BA said revenue of 1.94 billion pounds was 2.3 percent less than in the same period a year ago. Without the disruptions, BA said passenger revenue would have been up by 11 percent compared to a year earlier.

The net loss compared to a loss of 106 million pounds a year ago.

British Airways shares were up 1.2 percent at 218.5 pence as trading opened on the London Stock Exchange.

"The trends in our passenger and cargo traffic continue to be positive with yields up and costs down," said Walsh.

"Together this led to a reduced operating loss for the period though pretax losses increased as a result of additional finance costs and the impact of non-cash foreign exchange movements."

BA was hit by 23 days of strikes by cabin crew in May and June and suffered a major interruption of operations in April due to the volcanic ash cloud from Iceland. Cabin crew have voted down BA's latest contract offer, and may call further strikes.

The airline had previously reported that first-quarter traffic was down 14.9 percent compared to a year earlier and capacity was down 11.3 percent.

The first quarter loss follows a record annual loss of 425 million pounds ($665 million) for 2009-10.

Walsh said the airline was braced for further strikes.

"I want to reach a resolution but we are preparing for further industrial action. I am confident we will operate 100 percent of our long-haul services and we are looking at the short-haul program," he said.

The CEO said the offer recently rejected by the union was BA's "best and final offer."

"It addresses all the genuine concerns and I still believe it forms the basis of a resolution to the dispute," he said.

Derek Simpson, joint leader of Unite union, said his members wanted to see the airline thrive.

"This is a dispute over 10 million pounds. Contrast that with the 164 million pounds in (pretax) losses this quarter alone and questions must be asked about the direction of BA's management and the sense of them maintaining this dispute with cabin crew," Simpson said.

BA's privately held British rival, Virgin Atlantic, said Friday that it had an operating loss of 132 million pounds in the three months to June 30, although revenue was up 10 percent to 513 million pounds.

British Airways recently gained regulatory clearance for its merger with Spain's Iberia Airlines, and for a joint trans-Atlantic business with Iberia and American Airlines.

[Associated Press; By ROBERT BARR]

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