British Airways profits sky-dive

Poor profits

Strikes, delays and Icelandic volcanoes have made this a bad year for British Airways and as a result, second quarter profits have been hit hard with the airline company reporting a pre-tax loss of UK£164 million, larger than the UK£148 million loss it made in the same period last year.

British Airways said that all the disruptions the company had expected were "in line with previous estimates of UK£250m in the quarter". It also pointed out that total costs for the quarter were down 3.3 percent on a year ago. But revenue was also down by 2.3 percent.

BA's attempt to reduce its pension deficit got a boost however, when they stated that the UK pensions regulator had approved its plan which is key for a proposed merger with Iberia.

The Spanish airline reportedly has until the end of September to decide whether it wants to join with British Airlines.

Strikes and volcanoes

Most of British Airlines' problems have been hampered by cabin crew strikes, whose protests have led to 22 days without staff, 15 of which have been in this quarter. In comparison, the company lost only six days to the Icelandic volcano and the resulting ash cloud, which shut down airspace all over the continent.

When the dispute began, it was about changes to staffing levels, pay and working conditions. The union now says it centres on the removal of travel perks from workers who went on strike and disciplinary action taken against others, not to mention how BA handled industrial relations within the company.

Unite joint leader Tony Woodley said of the dispute, "I think it's the long-term damage which is perhaps more worrying than the current dispute. BA are driving down standards."

Speaking of the airline's losses, Chief Executive Willie Walsh said, "While some economic experts are flagging the risk of a 'double dip' recession, the steady recovery continues and, on that basis, we continue to target to break even at a profit before tax level for the full year."

He also highlighted that the company had cut costs in several areas including a 0.7 percent reduction in fuels costs and a 4.3 percent drop in non fuel costs. As such, for every mile a passenger travelled, revenue rose 12.7 percent.

Cargo business also performed well with revenue rising 36.7 percent.

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