British Airways urged passengers today to make Christmas bookings despite the growing threat of crippling strikes next month as it plunged to a record pre-tax loss of £292m during its most profitable trading period.
BA's chief executive, Willie Walsh, also unveiled plans for a further 1,200 job losses after warning that the carrier's worst first-half results since privatisation made cost reductions "essential". A cabin crew strike would add to its losses but Walsh underplayed the threat of a walkout organised by the Unite trade union.
Asked if potential customers should buy BA tickets for Christmas travel, he said: "Yes. Talk of a strike is premature and there is a long way to go. Unite has indicated that it wants to work with BA; cabin crew have indicated that they recognise change is necessary. We should be sitting down and talking."
The high court failed to award an injunction against BA's plans to cut cabin crew levels this week, but Unite vowed to press ahead with a strike ballot that could bring the airline to a halt from 21 December.
British Airways underlined how far its business model is out of kilter with its cost base as it reported a pre-tax loss of £292m in the six months to 30 September, compared with a profit of £52m for the same period last year.
The airline is now losing £1.6m a day after failing to generate enough revenue during the usually profitable summer months – a key period for all airlines.
Revenues fell by 13.7% to £4.1bn, in line with a reduction in fares as BA scrambled to maintain demand, including the all-important business-class customers who generate the majority of its profits.
However, overall costs outstripped turnover at £4.2bn and the loss was exacerbated by pension and finance costs.
Walsh said the industry remained in dire straits and cited forecasts by the International Air Transport Association (Iata) that carriers would lose $11bn (£6.6bn) this year despite declining fuel prices.
He believes the worst declines in passenger numbers are over – they fell by 469,000 to 17.7 million over the period – but warned that the industry was still in recession with no sign of "green shoots" yet. "Things have stopped getting worse but we are not turning the corner," he said, confirming that there was a "slight increase" in long-haul premium bookings in October.
BA said it intended to cut a further 3,000 jobs over the next six months, including 1,200 jobs cuts that had not been announced previously. The overall total includes the equivalent of 1,700 cabin crew, with the rest to come from international employees and ground staff including check-in desk workers. About 1,900 employees have left the airline since April, which will bring total losses over the financial year to 4,900 by March 2010.
Staff represent BA's second-biggest cost after fuel, accounting for about a quarter of expenditure, but attempts to wring cost savings from the airline's 14,000 cabin crew have descended into acrimony.
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