Tumbling profits for BA

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11:09 GMT +00:00

Tumbling profits for BA
Posted by: Economist.com | LONDON
Categories: British Airways
DAYS after announcing a proposed merger with Iberia, British Airways had rather less to cheer about as it revealed first-quarter profits of just £37m ($73m), 88% down on the equivalent figure last year.

"We are in the worst trading environment the industry has ever faced,” said Willie Walsh, the airline’s chief executive. “The combination of unprecedented oil prices, economic slowdown and weaker consumer confidence has led to substantially lower first quarter profits.”

He noted that fuel prices had doubled in the past year, sending BA's fuel bill soaring to more than £8m a day. BA has already taken steps to control costs by reducing its winter schedule, and it is also expected to raise fares. The company has ordered six new Boeing 777-300ER aircraft, which it will take delivery of from 2010. "They are 23 per cent more fuel efficient than the Boeing 747-400", said Mr Walsh, "and give us additional flexibility in the longhaul fleet."

Savings from a merger with Iberia, or from greater co-operation with American Airlines, have never been more necessary.