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| British Airways makes £148m loss | British Airways makes £148m loss |
| (about 1 hour later) | |
| British Airways has reported a pre-tax loss of £148m ($245m) in the three months to the end of June. | British Airways has reported a pre-tax loss of £148m ($245m) in the three months to the end of June. |
| This compares with a profit of £37m in the same period last year. Its operating loss of £94m compares with a profit of £35m last year. | This compares with a profit of £37m in the same period last year. Its operating loss of £94m compares with a profit of £35m last year. |
| Its losses come in the middle of a tough year for airlines as passengers cut back spending in the recession. | Its losses come in the middle of a tough year for airlines as passengers cut back spending in the recession. |
| "Trading conditions continue to be very challenging," Willie Walsh, the airline's chief executive, said. | |
| "While traffic volumes are down considerably compared to last year, they have stabilised during the quarter and show some signs of improvement for the peak summer months," he added. | "While traffic volumes are down considerably compared to last year, they have stabilised during the quarter and show some signs of improvement for the peak summer months," he added. |
| Revenues fell 12.2% to £1.983bn in the quarter. | Revenues fell 12.2% to £1.983bn in the quarter. |
| We're cutting forecast capital expenditure by 20% this year from £725m to £580m, and it's likely to remain at the same level this year Willie Walsh, BA chief executive Click here for BA's share price | We're cutting forecast capital expenditure by 20% this year from £725m to £580m, and it's likely to remain at the same level this year Willie Walsh, BA chief executive Click here for BA's share price |
| Passenger revenue fell 12.5% while the worldwide decline for airfreight has also hit its cargo business, where revenues were down 28.1%. | Passenger revenue fell 12.5% while the worldwide decline for airfreight has also hit its cargo business, where revenues were down 28.1%. |
| Other airlines including Air France-KLM and Lufthansa, which this week reported falling revenues, have also been hard hit by the slowdown. | |
| Staff cuts | Staff cuts |
| BA has faced possible industrial action over its efforts to cut costs and staffing numbers. The chief executive has previously said that its drive to save cash was part of a "fight for survival". In June, he asked thousands of staff to work for free for up to one month to keep the airline in business. | BA has faced possible industrial action over its efforts to cut costs and staffing numbers. The chief executive has previously said that its drive to save cash was part of a "fight for survival". In June, he asked thousands of staff to work for free for up to one month to keep the airline in business. |
| The airline had cut staff by 1,450 since the end of March through "reduced overtime, increased part time working and targeted voluntary redundancy", he said. | The airline had cut staff by 1,450 since the end of March through "reduced overtime, increased part time working and targeted voluntary redundancy", he said. |
| A "permanent structural change" to its employee cost base was "essential to our short-term survival and long term viability", Mr Walsh said. | A "permanent structural change" to its employee cost base was "essential to our short-term survival and long term viability", Mr Walsh said. |
| The airline should meet its cost-cutting targets, he added. | The airline should meet its cost-cutting targets, he added. |
| "Our engineers and pilots have voted for permanent change. This is a great step forward. Talks with other union groups continue. We're cutting forecast capital expenditure by 20% this year from £725m to £580m, and it's likely to remain at the same level this year," he added. | "Our engineers and pilots have voted for permanent change. This is a great step forward. Talks with other union groups continue. We're cutting forecast capital expenditure by 20% this year from £725m to £580m, and it's likely to remain at the same level this year," he added. |
| Negotiations continue with unions representing cabin crew and ground staff. They are currently in a cooling off period. | Negotiations continue with unions representing cabin crew and ground staff. They are currently in a cooling off period. |
| Total operating costs are down 6.6%, but "with revenue still weak, there is much more to be done", he added. | Total operating costs are down 6.6%, but "with revenue still weak, there is much more to be done", he added. |
| While trading conditions remain difficult for BA and other airlines, the company will be helped by easing fuel prices. | While trading conditions remain difficult for BA and other airlines, the company will be helped by easing fuel prices. |
| It said that its fuel bill was expected to be between £450m and £500m lower this year than last year. | It said that its fuel bill was expected to be between £450m and £500m lower this year than last year. |
| The company recently raised about £600m to shore up its balance sheet. | The company recently raised about £600m to shore up its balance sheet. |
| Not out of the woods | Not out of the woods |
| "British Airways has had a tough twelve months and the results today show that its far from out of the woods," said Saj Ahmad, an airline analyst, at Gerson Lehrman Group | "British Airways has had a tough twelve months and the results today show that its far from out of the woods," said Saj Ahmad, an airline analyst, at Gerson Lehrman Group |
| "Critical cost cutting can really only come if it manages to successfully negotiate a deal with unions and staff on reducing headcount - only 2% of staff elected to work for free. That's saved some money, but not enough to start a turnaround," he added. | "Critical cost cutting can really only come if it manages to successfully negotiate a deal with unions and staff on reducing headcount - only 2% of staff elected to work for free. That's saved some money, but not enough to start a turnaround," he added. |
| "The longer it takes to restructure, the likelihood of more deeper cuts to its staff base and as a result will damage its reputation for customer service - which its entire business model has been based upon." | "The longer it takes to restructure, the likelihood of more deeper cuts to its staff base and as a result will damage its reputation for customer service - which its entire business model has been based upon." |