British Airways profits attempt to land, crash and burn instead
We all expected airlines to have a stunningly lousy time during the recession, but even they weren't expecting the degree to which they'd suffer. Today, British Airways have announced that increasing fuel costs, the weak pound and falling passenger numbers have seen the airline record their biggest loss in 22 years - since BA was privatised.
The company has reported a loss before tax of £401m for the year to March 31st - that's compared to a profit of nearly £1 billion for the previous year. Where has all the money gone? Fuel costs rose by nearly 50 per cent last year, lumbering BA with a fuel bill of nearly £3 billion. Sacking people is also a costly affair - the airline cut 2,500 jobs and spent nearly £80 million in the process.
The drop in passenger numbers will also have execs screaming into their espressos; the total number for the year fell 4.3 per cent to 33.1 million. Worse still, since airlines like BA rely on margins from business and first class sales to make flights profitable, it's grim news when the number of passengers flying in the posh seats falls 13 per cent in a year. It's no surprise that BA has announced a sale on business class seats that's continuing until the end of June.
Although the airline will begin cutting services to reduce costs, the bosses aren't daft - they're well aware of the British need to indulge in drinking, gambling and sunshine when times are hard, and so have just announced direct flights from Heathrow to Las Vegas from the Autumn.