Strike may cost up to £40mil, says BA


LONDON: British Airways plc (BA) yesterday put the direct cost of a wildcat strike at its main London hub 13 days ago at up to £40mil even as it reported a first-quarter loss that was less than what the market feared. 

Europe’s biggest carrier said uncertainty created by the strike at Heathrow, the world’s busiest international airport, and the time taken to reach agreement with trade unions on the dispute had hurt forward bookings and would reduce revenue. 

“We will work hard to restore British Airways’ reputation with our customers,” chief executive Rod Eddington said in a statement, adding that the direct cost of the walkout by hundreds of BA check-in staff would be in the range of £30mil to £40mil. 

Shares in debt-laden BA nonetheless rose yesterday, with investors relieved that the airline had resolved the labour conflict and its deep cost-cutting had helped offset the fall in revenues in a harsh industry environment. 

BA and the trade unions reached agreement on Wednesday to end the costly labour dispute after its check-in staff walked off the job at Heathrow for 24 hours from July 18, forcing it to scrap more than 500 flights. 

The airline's pre-tax loss of £45mil for the three months to June 30, compared with a £65mil profit a year ago, came after ticket sales were adversely affected by the Iraq war, the SARS outbreak and sluggish economies around the world. 

Revenue for the quarter was down 10.7% at £1.8bil. 

“Clearly this is a really difficult time and in many ways it is the most testing period in aviation history,” said Eddington, adding that BA expected lower revenues for the next quarter compared with the year-ago period. 

But aggressive cost cutting did help to reduce net costs by 5.4% in the first quarter. BA, once labelled the world’s favourite airline, has made the most radical changes in the past two years of any European network carrier, slashing more than 10,000 jobs in a drive to lower its historically high cost base. 

Eddington said the labour dispute would not slow down BA’s drive to reduce its annual costs by £650mil by March 2004 and extract a further £450mil in costs by March 2005. – Reuters  

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