BA posts another record annual loss

By JANE WARDELL AP Business Writer

LONDON (AP) - British Airways PLC posted a record net loss for the second consecutive year on Friday after a cost savings program at the flagship carrier wasn't enough to outweigh the impact of lower passenger numbers and strikes by cabin crews.

But the earnings report for the year ended March 31 was slightly better than had been feared and BA forecast that, excluding taxes, it would break even this year as market conditions improved.

The full year net loss of 425 million pounds ($611 million), compared with a 358 million pound loss the previous year, was the largest since the former national airline was privatized in 1987.

Revenue dropped 11 percent to 7.99 billion pounds from 8.99 billion pounds.

The financial update comes just days before BA cabin crews are scheduled to walk off the job again for 15 days in a bitter dispute over changes to pay and working conditions.

A seven-day walkout arranged by the Unite union in March is factored in to the earnings report, but the recent closure of European air space because of the Icelandic volcanic ash cloud is not.

BA Chief Executive Willie Walsh said the airline was making progress on a cost savings program that has included cutting jobs and restructuring the company.

"Our cost base has improved and we are seeing signs of market conditions improving," he told reporters on a conference call. "The combination of the two of those leads us to forecast break even at the PBT (profit before tax) level."

Walsh added that the carrier was targeting 6 percent revenue growth this year.

Walsh has warned the Unite union that the changes at the center of their dispute with the airline, including fewer staff on long haul flights, are necessary for BA to survive in a post-financial crisis world.

"Returning the business to profitability requires permanent change across the company and it's disappointing that our cabin crew union fails to recognize that," he said. "The dispute ... should be put behind us as quickly as possible for everybody that works at BA."

However, there has been little sign that BA and Unite, which represents around 90 percent of the carrier's 12,000 cabin crew staff, will be able to reach a deal in the monthslong dispute.

Negotiations have become increasingly difficult since Unite forged ahead with a financially damaging walkout in March and BA took disciplinary action against several workers.

Unite was incensed when BA turned to the courts earlier this week, just hours before a planned series of strikes totaling 20 days was due to begin on Tuesday, winning a ruling that the walkouts were unlawful because of a technical error in the union's ballot of members.

That decision by the High Court was overturned by the Court of Appeal on Thursday and Unite announced plans to carry on with the rest of the planned strike dates - May 24-28, May 30-June 3 and June 5-9.

BA, which has been running a reduced service this week, said it plans to fly around 70 percent of passengers booked to travel over the targeted period, which includes British school summer vacation period, a long weekend and the run-up to the football World Cup in South Africa.

As with the March strike, London's Heathrow Airport will again bear the brunt of the cancelations with the airline planning to operate around 60 percent of its longhaul program and 50 percent of its shorthaul service from that hub. It plans to operate a full schedule at Gatwick and London City.

Walsh said Friday he expected a large number of cabin crew staff to ignore the strike call - as several did during the March walkout.