BA loses £164 million after strikes and volcanic ash

British Airways shares are on the up despite the airline reporting higher losses in the second quarter. There is relief that the financial impact of cabin crew strikes and volcanic ash was not higher than expected.

British Airways suffered large losses during the last quarter as a result of disruption caused by cabin crew strikes and Icelandic volcanic ash, figures today revealed.

The airline has reported a pre-tax loss of £164 million for the April to June quarter, up from the £148 million during the same period in 2009.

The airline said the impact of all disruptions was in line with previous estimates, some £250 million in the quarter, and that both the airline’s cash and debt position had remained strong.

Total costs for the quarter were down 3.3%, but total revenue was also down, by 2.3%. The company claimed that while passenger revenue was down 3.4%, without the disruption passenger revenue would have increased by 11% year on year.

Willie Walsh, British Airways’ chief executive, said: ‘Despite both revenues and cost being hit by the closure of UK airspace following the Icelandic volcanic eruption and the impact of industrial action, our financial performance improved during the quarter from underlying revenue increases and further cost reductions.

‘The trends in our passenger and cargo traffic continue to be positive with yields up and costs down. Together this led to a reduced operating loss for the period though pre-tax losses increased as a result of additional finance costs and the impact of non cash foreign exchange movements,’ Walsh said.

He added: ‘We have achieved some major strategic milestones in the last couple of weeks. Our transatlantic joint business with American Airlines and Iberia has received regulatory approval from the US and EU authorities and will start this autumn. In addition, we’ve received the green light from regulators for our merger with Iberia’.

BA cabin crew have staged 22 days of strikes for this year, and look set to be balloted for further strike action in the next few weeks. Meanwhile the Icelandic volcanic ash cloud forced all UK airspace to close for six days in April, which BA said cost the airline between £15 and £20 million per day.

BA's share price rose 6.2p to 222.2p, the top riser in early trading on the FTSE 100, as the company said it still expects to break even in the full year.