British Airways forecasts loss for second year running, warns of job cuts

UK flag carrier, British Airways (BA), warned yesterday it was on course to run up an operating loss for the second year in a row and that it would make further job cuts in an effort to reduce costs. The airline said it would likely make an operating loss of £150 million this year.

Without revealing details, BA said it would seek to cut underlying costs, excluding fuel, by atleast £220 million this year. It added it would be seek to cut costs by a further £80 million in 2010/11.

BA has already warned staff that it will seek a pay freeze this year. It is in talks with trade unions about measures to boost productivity and cut employment costs.

"We have been reducing our workforce for several years as a result of natural wastage and increased efficiency and that process will continue, especially through the downturn," BA said. "Talks are under way with the unions across the business to identify how we can work together to respond to the financial situation."

The carrier reported Wednesday that passenger traffic fell by 8.3% in February compared with the same month in 2008. It also noted that premium traffic had fallen by just over 20% and non-premium traffic by 5.5%.

"Market conditions remain challenging but broadly in line with previous expectations," the company said.

It informed investors yesterday it expected revenues to fall by 5% in 2009/10 and fuel costs by 10%. It also said it expected a decision on its attempts to win anti-trust immunity for its trans-Atlantic alliance with Spanish carrier Iberia and American Airlines from US regulators in the autumn.

"It is going more slowly than other applications. We had other interested parties raise a slew of issues, but we would hope that phase of information-gathering is close to completion," BA's head of strategy, Robert Boyle said.