British Airways burning through £2.7 million a day
By Nicholas Paler | 14:39:31 | 17 February 2009
British Airways saw shares fall today after warning it was eating into its cash reserves amid the deteriorating economy.
In an internal newsletter, the carrier said it was currently 'burning' through cash at a rate of £2.7 million a day, more than it is making, with its cash reserves diminishing as a result.
Chief financial officer, Keith Williams, said in the newsletter: 'We are burning around £2.7 million of cash a day. This means we are spending far more than we are earning and this is depleting our cash reserves.'
The warning took shares in British Airways down 5.5% by early afternoon, before they recovered a little to sit down 4.3% or 6.1p, at 134.9p, by 14:16pm.
Comments regarding the company's cash levels come after BA said in its most recent update that reserves stood at £1.6 billion at the end of December, down £278 million compared to nine months previously.
At the time of the update, BA also warned that its passenger numbers were falling, with passenger capacity in January, measured in Available Seat Kilometres, 2.6% below January 2008 levels.
BA also said that in the nine months to end of 2008 it had made a loss before tax of £70 million, and expected to make a full year operating loss of £150 million. In the note Williams did little to dispel worries regarding the stock, stating the outlook for the airline was 'bleak' for the next 24 months.