British Airways (BA) plc has reported a first-half net loss of £49 million ($77 million), as record high oil prices and a global economic slowdown hit the airline's bottom line.##m:[Read more]##
But the company's shares soared 15 per cent Friday, after the company raised its annual revenue forecast, announced cost-cutting measures and predicted a lower 2009 fuel bill.
The net loss compared to a profit of £493 million a year earlier, Europe's third largest airline said.
But Chief Executive Willie Walsh said the dire economic environment which had led to the first-half loss was in the past.
"The six-month period will be remembered as one of the bleakest on record," said chief executive Walsh.
"The period was hit by a crisis in the banking sector, record fuel prices and several airlines going out of business."
BA said the next six months would be boosted by falling fuel prices, reduced costs and increased revenue.
In the first half, revenue gained 6.4 per cent to £4.75 billion ($7.4 billion) on the back of higher ticket prices, leading the company to raise its forecast for annual revenue growth from three to four per cent.
The airline also said it was well placed to benefit from falling oil prices, which hit a record high of $147 in July but have fallen to around $61 per barrel. Chief financial officer Keith Williams, predicted in a conference call with journalists that the airline's fuel bill for 2009 would be roughly £2.8 billion ($4.4 billion), down almost 7 per cent from 2008.
This marks a significant turnaround, as 2008's fuel bill is expected to be a full 50 per cent higher than it was in 2007.
The company also announced plans to cut spending in anticipation of falling consumer demand by reducing its summer 2009 flight capacity by one per cent compared to a year earlier.
The reduction in capacity promises to combat the dual problems of falling passenger numbers and a rising number of empty seats on BA flights.
Passenger load factor — a key measure of seats filled — was nearly 5 per cent lower over the first half than it was a year earlier at 74.6 per cent. Meanwhile, BA carried 17.2 million passengers over the period — down 3.9 per cent on the previous year — as consumer demand dropped amid the economic downturn.
Shares rose 15 per cent to 150 pence ($2.37) in early trading on the London Stock Exchange.