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Soaring fuel bill hits BA profits | Soaring fuel bill hits BA profits |
(about 1 hour later) | |
British Airways has blamed a doubling of fuel costs for a sharp profits fall, saying the airline industry faced the "worst trading environment ever". | British Airways has blamed a doubling of fuel costs for a sharp profits fall, saying the airline industry faced the "worst trading environment ever". |
The carrier made pre-tax profit of £37m ($73.3m) in the three months to the end of June compared with £298m a year earlier - an 88% drop. | The carrier made pre-tax profit of £37m ($73.3m) in the three months to the end of June compared with £298m a year earlier - an 88% drop. |
It also said it would cut 3% of flights this winter to reduce overheads. | |
Earlier this week BA announced that it was in merger talks with Spanish airline Iberia. | Earlier this week BA announced that it was in merger talks with Spanish airline Iberia. |
'Unprecedented' prices | |
BA said its fuel bill was expected to be £3bn in the year to the end of March - the equivalent of £8m per day. | BA said its fuel bill was expected to be £3bn in the year to the end of March - the equivalent of £8m per day. |
However, it insisted it was "well prepared" with a focus on controlling costs. | |
"We are in the worst trading environment the industry has ever faced," said BA chief executive Willie Walsh. | |
"The combination of unprecedented oil prices, economic slowdown and weaker consumer confidence has led to substantially lower first quarter profits." | |
He added that the airline had managed to hedge some of its fuel costs in the quarter which "mitigated the impact" of rising bills, although they still rose by 49%. | |
The reduction in flights over winter would not "compromise its network", BA said. | |
The airline added that the proposed merger with Iberia would take months to finalise. | |
The deal is being seen as an attractive proposition for BA as it would allow it to reduce costs. | |
Terminal Five | |
The results are the first full quarter to include operations at Heathrow Airport's Terminal Five - used exclusively by BA. | |
BA said that more than six million passengers had gone through the terminal since 27 March and that it was going "from strength to strength". | |
When Terminal Five opened, problems with its operations led to hundreds of flights being cancelled and the loss of thousands of bags. | |
The embarrassment resulted in some executives leaving both BA and the Heathrow operator, BAA. |
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