RE: BA ANNOUNCES £160m LOSSES

I’ve just come across this aswell.

Looks as though BA may need some to make some decisions, and fast.

Shaun

BA staff braced for job cuts

By Ananova

British Airways staff are bracing themselves for thousands of job losses as the airline prepares to fight back from one of its biggest ever quarterly losses.

The company is thought to be on the brink of a major overhaul while squaring up to the low-cost carriers who have taken much of its business.

Details of the strategic review – known as Future Size and Shape – are being kept under wraps before an announcement later this month.

The need for action was underlined by figures showing pre-tax losses of B£160 million for the last three months of the year. That compared with a pre-tax profit of B£65 million a year earlier.

Fear of flying in the wake of the September 11 terrorist attacks and the impact of the economic slowdown were blamed by BA.

The bottom-line figure is the biggest since BA racked up a B£210 quarterly loss in the wake of the Gulf War in 1991.

Operating losses for the quarter were B£187 million, down from an B£80 million profit a year earlier, although the figure was better than the B£225 million loss that some analysts had been forecasting.

Turnover also dived 20% to B£1.84 billion, but BA said its revenue trend was starting to show signs of improvement.

Chief executive Rod Eddington said “considerable challenges” still lay ahead and that tough decisions would have to be made.

He said: “The future size and shape review will take a hard look at the number of people we employ and there will be additional job losses.”

Reports suggest BA may reduce its staff numbers by another 9,000 over five years – on top of the 7,000 already announced in recent months.

Mr Eddington did confirm that BA was looking at ways of taking on low-cost carriers such as Ryanair and easyJet.

It is thought BA will strip back its in-flight service on short-haul European flights, particularly those operating from Gatwick.

But Mr Eddington ruled out a repeat of the low-cost service Go which BA sold to a management buyout team last year.

He said: “I’ve always believed that it is impossible to run a non-frills airline and a full-service airline as part of one company.

“One gets in the way of the other and you end up confusing your customers and staff.”

While low-cost carriers have reported buoyant figures in recent weeks, BA showed that passenger capacity – a measure of the number of available seats – had fallen by 16.3% after it cut services in the wake of September 11.

Traffic volumes, which show the actual number of passengers carried relative to the distance flown, declined by 20.3%, BA added.

While costs in the quarter were reduced by 8.5%, debts rose B£339 million to B£6.5 billion – almost three times BA’s market value.

Mr Eddington dismissed speculation that BA planned a share rights issue to improve its balance sheet.

He added: “We have made real progress in managing our costs but British Airways still faces a number of other considerable challenges some of which were apparent before the terrorist attacks.”

Tim Lyle, national officer for the Transport and General Workers’ Union, is urging BA to avoid any compulsory redundancies.

He said: “We are waiting with baited breath for the impending announcement.”

Copyright Ananova 2002 all rights reserved