BA €196m in red after strikes and ash cloud

British Airways said today that cabin crew strikes and Iceland’s volcanic ash cloud had sent the beleaguered airline £164m (€196m) into the red for the three months to June 30.

The combination of the bitter industrial dispute with the Unite union and the closure of most of European airspace for almost a week in April cost the airline around £250m (€298m) over the quarter.

Cabin crew have taken 22 days of strike action since March and further walkouts could take place from September as the unrest lingers on.

But chief executive Willie Walsh said the airline had seen an improved operating performance despite the disruptions and BA still expects to break even this year after two years of losses.

2 INDUSTRY BA Substitute

(corrected repetition, amending figure in par 2 from £148m (€176m) to £94m (€112m)

Mr Walsh played down fears of a “double-dip” recession, saying the airline was seeing a “steady recovery” and positive underlying trends in both cargo and passenger traffic.

At the operating level, losses of £72m (€86m) were less than the £94m (€112m) posted a year earlier, the chief executive added.

The impact of the disruption saw the airline’s overall first-quarter revenues fall 2.3% to £1.94bn (€2.3bn). Passenger revenues were down 3.4% after an 11.2% slide in capacity.

But Mr Walsh also flagged up falling operating costs – helped by a lower fuel bill – and added: “Our focus must remain on cost control as we grow and continue our quest for permanent structural change across the business.”

The group also received a boost this month when it was given US regulatory clearance for its alliance with American Airlines and Iberia on transatlantic flights, as well as agreeing a recovery plan with regulators for its pension scheme.

But BA is still facing the threat of further strikes after members of Unite rejected its “final” offer, raising the prospect of another ballot for industrial action.

Derek Simpson, joint leader of Unite, said he was sorry to see BA lose money, adding that it had never been the union's intention to see the company struggle.

He again accused the carrier of imposing change on cabin crew without their agreement, insisting that the union had come within £10m (€11.9m) of savings wanted by BA, which was a “drop in the ocean” compared with today’s losses.

Mr Simpson told the BBC Radio 4 Today programme that cabin crew were concerned about a “fall” in standards at BA, with its reputation for providing a premier service “disappearing”.

He said: “You have to question the direction and sense of the management, particularly its chief executive who wants to impose change in a bid to put up profits, without the support of staff.”

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