Originally Posted by Financial Times
In a speech in the French capital to the Financial Times/Moët Hennessy Business Club, Mr Walsh said BA had planned “on the assumption of a 24-month downturn, and we have seen nothing yet to persuade us we are over-pessimistic”.
The flag carrier, one of the big three European airlines, is facing a second consecutive year of losses. In a breakthrough in its efforts to cut costs, it emerged that its pilots are to be balloted on a package of pay cuts and productivity improvements tied to a long-term share incentive scheme. There would also be up to 78 voluntary redundancies.
Mr Walsh said the trading environment was “the harshest this industry has ever faced”.
More airlines would go out of business, especially as the oil price was rising again.
He said: “Though some of the financial markets may be looking better, I believe that for airlines, the worst of this recession is still ahead of us.”
A “structural shift” was occurring, said Mr Walsh and he warned demand for business travel, traditionally the main engine for profits at long-haul network carriers, might never fully recover.
“It may be that demand in the highest-yielding, fully-flexible premium business market will never recover to the levels we were seeing in 2007.
“That is a sobering message for all traditional airlines. Premium travel has been central to the viability of their business model for a very long time,” he said.
BA’s premium traffic fell by 17 per cent year-on-year in May and Mr Walsh said some of its biggest corporate customers were “changing their behaviour as consumers”.
Very sobering quote about the structural shift away from premium business travel.