BA anticipates losses next year

In an announcement prior to its investor day, British Airways (BA) has stated that by 2010 there is likely to be a 150 million pound deficit forecast, although this did not come as much of a surprise to the market.

The airline has been affected by a 20 percent reduction in premium traffic which generates a high proportion of the airline’s profit.

Compared to last year the tightening has occurred due to the drop in corporate travel and this has been made worse in February as the fall in traffic has been a result of extensive snowfall with a significant number of cancellations.

Total traffic, which is measured by distance travelled, has fallen by 8.3 percent, although for February the adverse weather and the shorter month have had an affect, although the reduction in premium passengers is a real concern.

Forecasts are that revenue in the current year will fall by 3.5 percent but will drop by as much as 5 percent next year.

It is hoped that the decline will be offset as the carrier attempts to reduced non-fuel costs by 220 million pounds in the first year and again by 80 million pounds in the second year, meanwhile fuel costs are likely to have fallen by around 10 percent.

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