WILLIE Walsh, the chief executive of British Airways, is expected to reveal that the troubled flagship carrier is heading for its second consecutive year of losses when he updates the market this week.
The airline, which has already announced its first ever April to June loss since privatisation in 1987, is grappling with a sharp fall in premium traffic, an acrimonious battle with staff over strike action and rising fuel prices.
Walsh has been t
aking action to lessen the impact of the economic crisis by cutting flights, axing management bonuses and even ditching complimentary hot towels for passengers on short-haul business class flights.
But analysts' consensus forecasts point to a pre-tax loss of £252 million for the six months to September on revenues of £4.13 billion when it updates the market with half-year figures on Friday.
BA, which is also in the grips of an acrimonious battle with staff over strike action, slumped into the red by £148m in the first quarter of the year against profits of £37m a year earlier.
The airline said costs had come down by 6.6 per cent in the first quarter, but warned there was "much more to be done". It has announced plans to cut total staff numbers by 3,700, in addition to a reduction of around 2,500 achieved between June 2008 and March 2009.
BA is locked in a fight with unions over its plans for job cuts and a pay freeze and has faced the threat of industrial action from different sections of its workforce.
Unite, the union, has applied for an injunction from the High Court to prevent BA imposing changes to working practice on its 14,000 cabin crew. BA has said that from November 16 it would reduce the number of crew on most long-haul flights and senior staff would have to make up the difference by joining the food service teams. New employees will also be put on different contracts with lower pay.
The union, which has hired well-known employment lawyer John Hendy QC, is seeking a hearing this week to block the contract changes. The move is in addition to plans for industrial action among 14,000 workers in protest at the imposition of new employment contracts. BA is also proposing to freeze crew pay for two years and cap the amount they receive in allowances for long-haul travel. About 1,000 crew will be taking voluntary redundancy and a further 3,000 are moving to part-time work.
Nick Raynor, investment adviser at retail stockbroker The Share Centre, said there would be "plenty of interest in the statement".
"The trend for passenger numbers and bookings is always important, but alongside this you have the threat of strike action, the long-awaited merger with Iberia, news on the pension deficit and ongoing restructuring plans," he said.
Meanwhile Walsh has said that the carrier is likely to have to wait until at least mid-November to win approval from the US Department of Transportation on its proposed transatlantic tie-up with American Airlines.
The two carriers are seeking antitrust immunity for the third time since 1996 on efforts to forge closer ties than in their existing Oneworld alliance.
Recently the BA share price has enjoyed a strong period of performance. In the third quarter it was the best performing share in the FTSE 100.
Analysts say this was probably due to an improvement in premium traffic trends and possibly hopes for better corporate news in the fourth quarter.
