British Airways H1 and traffic numbers

graeme at 9:21 a.m. Fri 06 Nov 2009

British Airways reported a pre-tax loss of £292m in the first half. Load factors, for both passengers and freight, improved, but only because of steep cuts in capacity (available seat kilometres down 6.4% in year on year in October).

The underlying decline is steep: revenue passenger kilometres fell 1.9% in October and cargo tonne kilometres fell 0.9% (compared with the previous October).

British Airways is highly geared (80% debt/total assets) and unprofitable. It should turn around as the economy recovers, but it was losing ground to budget airlines even without recession, and recovery may not be rapid. Despite the drop in the oil price, both passenger and cargo costs have fallen less steeply than revenues. The next year or so is clearly going to be very tough and BA badly needs to cut costs (it is doing so, but is meeting resistance).

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