British Airways half-year profits plunge 92%

The economic downturn continues to have a devastating affect on the airline industry after British Airways (BA) has reported a 91.6% fall in half-year profits.

As well as the downturn, soaring fuel costs have had a major impact on airlines with ATA Airlines, Aloha Airgroup, EOS, Maxjet, Oasis, Silverjet, Skybus Airlines, Sterling Airways all going bust this year.

However, it seems that even major players such as BA can’t escape the problems in the industry. The group said pre-tax profit totalled £52 million ($81.6 million) between April and September, compared with £616 million in the same period last year.

According to BA, its fuel costs were 52% higher than a year ago, however, it said it was in a strong position to benefit from the current fall in fuel prices.

BA’s chief executive, Willie Walsh, described the period as one of the bleakest on record adding that the industry continues to face very difficult trading conditions due to record fuel prices and the economic downturn hitting passenger numbers.

However, Mr Walsh did say that the airline would be able to make a ‘small profit‘ for the financial year.

Due to weakening demand, BA is to cut the number of flights by approximately 1% next year which includes the suspension of services from Heathrow to Dhaka and Kolkata, and Gatwick to Dublin and Zurich.

On a more positive note, Mr Walsh said Heathrow’s Terminal 5 was running more smoothly. The new £4.3 billion terminal, which was opened in March, caused chaos due to a lack of baggage handlers, which resulted in cancelled flights and thousands of passengers without their luggage. Furthermore, it ultimately led to the departure of Gareth Kirkwood, the director of operations and David Noyes, the director of customer services.

Meanwhile, Mr Walsh said a new third runway is crucial for the future of Heathrow airport. Prime Minister Gordon Brown is currently considering the environmental impacts.

Earlier this week, Europe’s largest no-frills airline, Ryanair, reported a 47% fall in profits during the first half of the financial year, also as a result of soaring fuel costs and the economic downturn.

The Irish budget airline said net profits in the six months to September 30 stood at €214.6 million (£169 million; $277 million) compared with €407.6 million the previous year.

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