British Airways braces for record half-year loss
November 2, 2009 British Airways is this week expected to announce its largest ever interim loss as cabin crew prepare to vote on winter strikes that could deepen its financial crisis.
The flag carrier will unveil a crippling £250 million pre-tax deficit over the past six months, The Times reports, putting it on track for the biggest full-year loss in its history.
BA already posted record-high losses of £401 million last year, which prompted it to unleash the wave of cost-cutting measures that have triggered the latest staff revolt.
Analysts are predicting that the airline will post an operating deficit of £127 million across the first two quarters – typically a buoyant period for carriers.
Those losses will snowball into a pre-tax figure of almost £250 million after other factors such as currency fluctuations, fuel hedges and redundancy costs are factored in.
In response, BA has been quick to note that the travel industry was one of the hardest hit sectors in the recession, stressing that unlike many other carriers it has enough cash reserves to weather the difficult economic climate. But the airline is also spying cutbacks.
As well as scrapping free meals on short-haul flights, the airline has rolled out a raft of no-frills-style surcharges that include a levy for reserving your seat and higher excess baggage fees. Predictably, passengers have borne the brunt of this cost-cutting.
However, alongside the flying public, it is BA's own staff – long regarded as among the best paid employees in the industry – which are now feeling the pinch.
Management attempts to overhaul contracts have provoked outrage from unions, who accuse BA of bullying by trying to freeze pay for two years; lower starting salaries; and dramatically curtail the generous allowances paid to cabin crew operating on long-haul flights.
Some 14,000 staff will shortly be balloted over strike action for the peak Christmas period, potentially bringing misery to UK airports and further eroding BA's profits.
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