Poor old British Airways. If it wasn't bad enough that it spent last quarter locked in a bitter dispute with its cabin crew, it also had to cope with the fall-out from the ash cloud too (in every sense) - the result being a dismal pre-tax loss of £164m. That's even worse than the £148m loss it made during the same period last year. Nevertheless, chirpy chief executive Willie Walsh seems cheerily chipper about the situation, saying that despite the losses, BA is ‘on track’ to stage a recovery. And interestingly, the markets seem to agree - although presumably it all depends on them resolving this pesky strike...
 
The headline numbers don’t look good: not only have the airline’s losses grown, but revenues are down by 2.3%, too. Look closer, though, and it’s easy to tell why it’s happened: not only has the airline been affected by 22 days of strikes this year (15 of which were during the April-June reporting period), costing it an estimated £180m, but the ash cloud also contrived to wreak havoc on company profits. With airspace over the UK closed, the majority of BA’s planes were out of action for six days.
 
There was a silver lining to these clouds, though: strike or not, all Walsh's money-saving efforts seem to be bearing fruit. BA's costs were 3.3% lower, while fuel costs dropped by 0.7% and its yields (the amount it makes per passenger for every mile they travel) were up by 12.7%. Its cargo business also saw revenues jump by 36.7%. Indeed, Walsh now reckons that BA is likely to break even (before tax) by the end of the year. As a result, the markets have given today's results the thumbs-up: BA shares rose by 3% in early trading. Nice.
 
But this optimism could be short-lived if Walsh fails to deal with this cabin crew dispute (one way or another); customers won’t be particularly keen to book flights with an airline that could still face strikes at any moment - and given the fact that cabin crew have just rejected BA's 'final' pay offer, there's still no light at the end of the runway. These results weren't as disastrous as they might have been, but that £180m would still have made a big difference.  

 

Still, here's some consolation for Walsh: rival Virgin Atlantic said today its revenues fell 8.6% to £2.35bn last year (although it did see its quarterly profits rise by 10% to £513m). And at least there are no profit-sapping volcanoes erupting at the moment...

In today's bulletin:
It never rains, but it pours (ash) for BA
Foreigners sell British energy assets to other foreigners
Fairytale ending for Miramax as it's snapped up by VC firm
We'll drink to that - beer sales up for the first time since 2006
Will scrapping the DRA mean more red tape for SMEs?

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