British Airways Posts Slight Improvements During First Quarter, Despite Strike Action and Ash Crisis
British Airways on Friday reported an operating loss of some £72 million ($112.4 million), a slight improvement from the same period last year, despite strike action and the unprecedented volcanic ash crisis that canceled flights across Europe.
Total revenue in the period for the three months that ended June 30 were down 2.3 percent, posting a total loss of £164 million ($256.1 million) before tax. Passenger revenue was down 3.4 percent, partly because of the volcanic ash crisis and multiple strikes that grounded scores of British Airways flights.
If there had been no disruption, the airline said, passenger revenue would have increased by some 11 percent year on year.
“Despite both revenues and cost being hit by the closure of UK airspace following the Icelandic volcanic eruption and the impact of industrial action, our financial performance improved during the quarter from underlying revenue increases and further cost reductions,” said CEO Willie Walsh. “The trends in our passenger and cargo traffic continue to be positive with yields up and costs down. Together this led to a reduced operating loss for the period though pre-tax losses increased as a result of additional finance costs and the impact of non cash foreign exchange movements.”
Walsh said its cost performance continues to follow last year’s trend with total costs for the quarter down around 3.3 percent. “Our focus must remain on cost control as we grow and continue our quest for permanent structural change across the business,” Walsh said.
Further, British Airways said its cargo business has seen strong performance, with revenue increasing by 36.7 percent. Cargo yields increased by 33.9 per cent, driven by demand, mix and fuel surcharges. Cargo volumes, measured in cargo tonne kilometers, increased by 2.1 percent.
Operating costs were down 3.3 percent. Fuel costs were down 0.7 percent, and other non fuel costs reduced by 4.3 percent.
Additionally, British Airways’ cash position at the end of June 2010 was £1.7 billion ($2.6 billion), up £35 million ($54 million) from the end of March 2010.