British Airways issues warning on premium sales drop

Worsening economic conditions have hit two of the major air carriers in Europe with British Airways warning that September revenue forecasts were at risk due to a sharp drop in premium-class ticket sales and Aer Lingus indicating that it was launching an urgent programme of cost-cutting.

BA noted that first-class and business-class traffic numbers dropped by 8.6 per cent from a year ago, and that this was the first time the carrier experienced a drop in premium traffic for September in four years. Economy-class traffic was down by 4.1 per cent.

Up until this point in 2008, premium-class traffic had been proving resilient to the economic downturn. The British Airways traffic numbers are suggesting that the deepening of the financial crisis is finally taking its toll.

“Trading conditions continue to be challenging,” the airline commented, saying that economic uncertainty was having an impact on future bookings as well. On a more positive note, BA noted that per-passenger revenue and a strengthening dollar were largely compensating for the drop in volumes and that it was also cutting operating costs to counterbalance the risk of falling revenue.

“The target continues to be for the business to break even at the operating level” on a full-year basis, the airline continued. In August, BA had forecast that it expected a “small profit” for the full year, based on an increase in revenue of three per cent.

Aer Lingus has indicated that it wants to introduce “substantial” costs savings in order to ensure long-term viability and independence.

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www.britishairways.com