From the Sydney Morning Herald:
British Airways says it sees signs of hope
Steve Rothwell
August 3, 2009
SHARES in British Airways rose sharply after it said passenger numbers and seat occupancy were showing signs of improvement, suggesting it may recover from the recession faster than Air France-KLM Group.
On Friday British Airways reported a £106 million ($212 million) net loss in the three months to June, its worst first-quarter figures for 22 years. Air France lost €431 million ($735 million). Analysts had expected €194 million. The stock fell 4.1 per cent.
BA advanced 6 per cent after its chief executive, Willie Walsh, said that while yields or ticket prices may fall further, volumes and occupancy are likely to improve in the next few months. Quarterly sales fell 12 per cent to £1.98 billion, compared with a 19 per cent decline at Air France.
BA rose 8.1 pence to 142.4 pence in London, its biggest gain since May 5.
Air France’s results are also trailing those of Lufthansa, the regional No. 2, which posted a €216 million second-quarter loss on Wednesday.
British Airways has delayed aircraft deliveries and cut back in-flight catering and is in talks to eliminate as many as 4000 jobs. Mr Walsh said last month that Europe’s third-largest carrier had also raised $US1 billion ($1.2 billion) in new funds to bolster cash reserves.
A decline in yields, or average passenger revenues, will accelerate this quarter as fewer people fly in first and business class and a drop in the price of oil prompts the carrier to cut surcharges on ticket prices, BA said.
‘‘The industry continues to face very difficult trading conditions, with considerable uncertainty over the likely time frame of the recovery,’’ Mr Walsh said on a conference call. ‘‘We continue to work towards a permanent structural change to our employee cost base, which is essential to our short term survival and long term viability.’’
Passenger traffic fell 3.2 per cent, led by the slump in premium travel, BA said. The proportion of seats filled, slid 0.1 percentage points to 77.6 per cent. At Air France, traffic dropped 5.8 per cent and the load factor slipped 0.9 points to 79.4 per cent.
The International Air Transport Association has said airlines may lose $US9 billion this year and sales may drop 15 per cent, a forecast that Mr Walsh has called optimistic.
BA has been mired in talks with unions as it seeks to push through job and pay cuts with ground staff and cabin crew. Negotiations with the Unite union, which represents 14,000 flight attendants, ended on July 23 without agreement and the two sides are in a 14-day ‘‘cooling off period’’.
The airline has agreed terms with pilots to cut 78 jobs, reduce pay by 2.6 per cent, boost working hours and pare benefits. It has also reached an accord with engineers.
BA, which tried and failed to merge with Qantas last year, is in talks with Iberia about an all-share merger to create an airline with bases in London and Madrid, and is seeking permission for a tie-up with American Airlines that would cement its dominance on lucrative North Atlantic routes.