BA will survive industry crisis, boss vows

British Airways boss Rod Eddington said today the beleaguered airline would survive despite reporting a 98% dive in second-quarter profits.

Pre-tax profits for the three months to September 30 - one of the busiest periods of the year for the travel industry - were £5m, while turnover slipped 12% to £2.25bn.

But Mr Eddington remained confident about the long-term future of the group.

He said: ‘‘We will survive the industry crisis. We have already taken sufficient actions to control costs and conserve cash.’’

As well axing more than 5,000 jobs, BA has grounded 20 planes and cut back on routes since the September 11 attacks, which have hit the sector hard.

Mr Eddington said BA currently had resources of around £3.4bn in assets, cash and additional facilities.

Net debt was at a ‘‘manageable’’ £6.5bn, chief financial officer John Rishton added, and there were no plans to sell any assets such as BA’s stake in Australian carrier Qantas.

The update came as BA reported a 70% fall in half-year pre-tax profits to £45m. Turnover slipped 7% at £4.55 bn.

The London market had been expecting a loss of up to £70m and one analyst said it was the tight control of costs that had kept BA in the black.

But both airline and City agree BA will make a ‘‘significant’’ loss for the full-year, with house broker Merrill Lynch putting the figure at nearly £800m before exceptionals.

In the meantime BA, based in Harmondsworth, north-west London, is reviewing the future direction of the airline.

The overhaul - dubbed Future Size and Shape - will look at no-frills airlines such as Ryanair and see if BA can adopt any of their practices.

The role BA could play in industry consolidation will also be looked at.

There are strict controls governing links between airlines, including mergers and takeovers, but BA believes the industry crisis will prompt governments to rethink current regulations.

Mr Eddington conceded that the review could lead to more job losses once it was completed in the new year.

The Transport and General Workers’ Union said it would continue to work with BA but warned that the price of co-operation was no more job losses.

Tim Lyle, T&G’s national secretary for civil aviation, added: ‘‘BA will survive this, I am confident of that.’’