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British Airways

No other option for BA but to cut back

Jul 05, 2009

LONDON - British Airways PLC reported another month of declining passenger traffic, forcing the U.K. flag carrier to further cut summer and winter capacity.

The company also said it plans to shed as many as 3,700 jobs in the fiscal year through March.

BA said Friday it will cut capacity by 3.5% in the April-October period, compared with a previously planned reduction of 2.5%, and will cut its winter schedule by 5%, instead of a planned 4% reduction.

The airline said it expects a five-month delay in delivery of its first six Airbus A380 aircraft, which are due in 2012. The delivery of the remaining six A380s will be delayed by two years to 2016. Airbus is a unit of European Aeronautic Defence & Space Co.

BA said it will ground its remaining three mainline Boeing Co. 757 aircraft next summer and a further three Boeing 747-400s in the winter of 2010.

The carrier said it expects capital spending to fall to £580 million, or about $950 million, this fiscal year from its original target of £725 million.

Traffic fell 3.8% in June from a year earlier to 9.93 billion revenue passenger kilometers. Its total number of passengers fell 4.9% to 2.9 million. Premium traffic dropped 15%, and nonpremium traffic fell 1.3%.

A 1.7% cut in capacity still wasn't enough to counter waning demand. BA's passenger load factor, an indicator of how many seats were filled with paying passengers, fell 1.8 percentage points to 79.6%.

The airline said that on an underlying basis, premium and nonpremium volumes and seat factors have been stable for more than three months.

Separately, Ryanair Holding PLC, Europe's largest low-cost airline by passengers carried, said it had 13% more passengers in June than a year earlier at 5.8 million. Over 12 months, Ryanair carried 60.2 million passengers, the highest annual number in its history.

No other option for BA but to cut back
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