British Airways said its first- quarter loss widened after strikes by cabin crew grounded flights and hurt bookings, and a volcanic ash cloud from Iceland closed European airspace.
The net loss was £122 million in the three months ended June 30th, compared with a loss of £106 million a year earlier, London-based British Airways said in a statement today. Analysts had predicted a loss of £167.5 million. Sales fell 2.3 per cent to £1.94 billion.
An 18-month dispute over staffing levels and pay for 12,000 flight attendants spilled over into strikes in March, with services grounded on 22 days, mostly in the fiscal first quarter. Cancellations were compounded by the April eruption of the Eyjafjallajökull volcano, closing the company's London Heathrow hub.
"The headline numbers may not look great, but for the first time in goodness-knows-when the focus should now be on how the business is trading, rather than crisis management," said Douglas McNeill, an analyst at Charles Stanley in London.
Chief executive Willie Walsh said the airline had seen an improved operating performance despite the disruptions and BA still expects to break even this year after two years of losses.
He played down fears of a "double-dip" recession, saying the airline was seeing a "steady recovery" and positive underlying trends in both cargo and passenger traffic.
At the operating level, losses of £72 million were less than half the £148 million posted a year earlier, the chief executive added.
Mr Walsh won US antitrust approval for a revenue-sharing alliance with AMR's American Airlines on July 20th, realising a plan that had been stymied in 1997 and 2001. A merger between the UK carrier and Iberia of Spain is also due to close this year pending shareholder approval.
British Airways, Europe's third-biggest airline, had been predicted to report sales of £1.89 million, according to analyst estimates.
Cabin crew rejected the latest pay proposals from Mr Walsh on July 20 following a postal ballot, raising the possibility of further walkouts. The Unite union has said that the terms on offer might be acceptable if the chief executive restores travel perks that were removed from striking workers.
Passenger traffic at British Airways fell 11.4 per cent in June after the first nine days of the month were hurt by strikes. Travel decreased 9.2 per cent in first- and business- class seats and by 11.4 per cent in coach.
But Mr Walsh also flagged up falling operating costs — helped by a lower fuel bill — and added: "Our focus must remain on cost control as we grow and continue our quest for permanent structural change across the business."
Derek Simpson, joint leader of Unite, said he was sorry to see BA lose money, adding that it had never been the union's intention to see the company struggle.
He again accused the carrier of imposing change on cabin crew without their agreement, insisting that the union had come within £10 million of savings wanted by BA, which was a "drop in the ocean" compared with today's losses.
Mr Simpson told the BBC Radio 4 Today programme that cabin crew were concerned about a "fall" in standards at BA, with its reputation for providing a premier service "disappearing".
"You have to question the direction and sense of the management, particularly its chief executive who wants to impose change in a bid to put up profits, without the support of staff."
Bloomberg, PA