British Airways reports drop in earnings

As an evidence of the turmoil in the aviation industry due to the rising fuel prices, Europe’s leading airline, British Airways, announced on Friday that its earnings have taken a major hit in the period from April 08 to June 08. Therefore, it is now considering a revision of its revenue outlook for the entire year. Expressing his dismay at the present state of affairs, the airline’s chief executive, Willie Walsh mentioned that they are in the worst trading environment that the industry has ever witnessed. Various factors like unprecedented oil prices, weaker consumer confidence and the economic slump has led to a substantial fall in the profits.

This news comes only three days after the British Airways announced its plan to merge with the Spanish airline Iberia. Its quarterly profit has plunged to £27 million with a meagre 2.8 per cent increase in revenue (£2.259 billion).

These results from the British Airways confirm the prediction of the international aviation body IATA which stated that as many as 25 airlines over the world would have succumbed to the circumstances and ceased operations since the start of this year.

Lufthansa, the other major airline reported a sharp 59 per cent drop in its first-half net profit in comparison to last year. Air France — KLM are scheduled to report their quarterly figures on coming Tuesday.

Mr. Walsh stated that with fuel costs having gone up by 49 per cent in comparison to the same period last year, British Airways is going to reduce its winter capacity by 3.1 per cent and will have no other option but to increase ticket prices as a corrective measure. This step will definitely hurt their volumes.

Please visit www.britishairways.com for more details