British Airways Reports Almost One Billion Pound Loss

British Airways is reporting a greater than expected loss for the first half of 2009 and further predicting their annual revenue to be at least GBP one billion less that in 2008. Currently, the airline is facing scrutiny for their alliance with American Airlines and Iberia in Spain. Both EU and US competition regulators are reviewing the alliance.

BA, on Friday, released pre-tax number losses of GBP292 million for the previous six months which ended in September. In conjunction with the announcement, the airline claimed they would be looking to further cut costs in the coming months in the hopes of recovery.

Chief executive for British Airways, Willie Walsh, said that the company’s profits for this fiscal year will most likely fall GBP 1 billion short of their previous year’s earnings. He added that this year the airline would be sitting near the bottom of the economic downturn.

The airline industry has been among the hardest hit by the worldwide recession, as holiday and business trips have been the first thing consumers are cutting back on during this harsh economic climate. BA is also facing competition from startup budget airlines, which more and more people are turning to during the downturn.

The airline announced that overall passenger revenue had fallen 13.6 percent, however they also announced that the industry was beginning to show signs of stabilizing. Earlier in the week, Ryanair reported that they had experienced an 80 percent increase in profits, proving the hard hit that budget airlines are giving to more established airlines such as British Airways. Both British Airways and others have begun cutting services such as meals and baggage allowances in order to compete with the no frills budget airlines springing up all over Europe.