'Further action' warning to keep airline on track

BRITISH AIRWAYS will survive the war in Iraq, chief executive Rod Eddington has told senior staff — but he also warned of "further action" to keep the business on track, it has emerged.

The airline would survive the Iraq conflict but would face "tough times ahead", Mr Eddington told managers in an e-mail.

"More than ever, cash is king, and further action will be necessary in the short term to ensure the business remains on track," he said.

"The conflict will have a significant financial impact on the industry and our business, as we learned from our Gulf War experience in 1991 and, of course, September 11th. Importantly, we must not expect to return to where they were two years ago when the war has finished."

The airline, which has already said it will cut 3,000 jobs by March 2004 on top of 10,000 in the last year, is monitoring the effects of the conflict on passenger numbers every day. It is understood routes to the Middle East and the airline's seven daily flights to New York's JFK airport are under review.

The move follows a 20% reduction in its overall capacity over the last few years to head off the effects of a slump in demand for air travel following the September 11 terrorist attacks in 2001, as well as intense competition from budget airlines.

In May last year BA reported its worst set of results since privatisation 15 years ago, with full-year losses of £200 million. But as cost-cutting measures fed through, pre-tax profits for the three months to September 30 rose to £245 million, against £5 million for the same period the previous year.

In the run-up to the outbreak of war, BA has suspended flights to Israel and Kuwait but operates a reduced service to Dubai and continues to fly to Doha and Bahrain and Jeddah and Riyadh in Saudi Arabia.

In his e-mail Mr Eddington reassured staff: "We have nearly £2 billion of cash in the bank and this impressive war chest will be used to help us through these challenging times."