BA announced winter capacity cutbacks following profit dive

01-Aug-08 Christy Wyatt

British Airways today (1 August) announced its winter schedule capacity would be reduced by 3.1 per cent following a sharp drop in profits.

The airline revealed a pre-tax profit of £37m in its interim management statement, compared to £298m in 2007.
"We are in the worst trading environment the industry has ever faced," said British Airways' chief executive Willie Walsh.

FUEL PRICES

The loss of profits was blamed on the combination of unprecedented oil prices, economic slowdown and weaker consumer confidence.
"Fuel prices have doubled in the past year. A successful hedging programme mitigated the impact but nevertheless fuel costs at £706 million were up £233 million in the quarter," said Walsh.
BA's fuel bill is expected to exceed £3bn this year - the equivalent of more than £8m every day.
The airline has ordered six Boeing 777-300ER aircraft for delivery beginning in 2010, which promise to be 23 per cent more fuel efficient than the Boeing 747-400.

DESTINATIONS

The cutbacks would mainly affect the frequency of multiple-frequency short haul flights such as Amsterdam, Brussels and Berlin, a BA spokesperson told Luxury Travel.

BA's Gatwick services to Newquay, Sarajevo, Dresden and Poznan will be cancelled. Planned launches for Gatwick to Valencia and Oporto have also been cancelled.

Heathrow's service to New York's JFK will drop from eight daily flights to seven when BA's winter schedule starts on 26 October.

Heathrow's Tokyo Narita service falls from twice to once daily on 7 December.

AGENT CONCERN

Sophie Leyton, director, Exosphere, expressed concern at the prospect of cutbacks.
She said: "It is more worrying on the less popular routes as it will mean an already limited choice could become severely so.
"As a result it may be difficult to access some destinations directly and some people will not be prepared to make the effort to get there."


MERGER TALKS

Meanwhile, merger talks are underway with long-term partner Iberia.

Aviation expert John Strickland, director of JLS Consulting, said the merger could make it "easier to book shared itineraries, [with] potential improvements in joint pricing."
He told Luxury Travel: "BA would gain more extensive access to the Latin American market than it has now on its own - more routes and frequencies - which would benefit travellers."

Subsidiary airline OpenSkies will launch a daily service between Amsterdam's Schiphol International Airport and New York's John F. Kennedy Airport on 15 October.
www.ba.com