Published on ShanghaiDaily.com (http://www.shanghaidaily.com/)
http://www.shanghaidaily.com/sp/article/2008/200808/20080802/article_369001.htm
British Airways earnings nosedive 90%
Created: 2008-8-2
Author:Andrea Rothman
BRITISH Airways Plc plans to raise ticket prices, reduce seating and restrain fuel expenses as first-quarter profit fell 90 percent, three days after announcing merger talks with Iberia Lineas Aereas de Espana SA.
British Airways rose as much as 8.1 percent in London trading after the carrier said hedging oil costs will lower the effect of higher prices this year. Every US$1 climb in oil will slice 8 million pounds (US$16 million) from earnings, down from an earlier forecast of 16 million pounds, British Airways said. Chief Executive Officer Willie Walsh said fare increases were "inevitable" as the industry faced its "worst trading environment" in history.
Walsh said this week he started talks to combine BA with Madrid-based Iberia to lower spending on planes, maintenance and staffing. British Airways will also file for United States antitrust approval in the next several weeks to deepen ties with AMR Corp's American Airlines.
Investors are "likely to largely ignore the outlook and focus on merger news flow going forward," Chris Reid, an analyst at Deutsche Bank AG, said.
British Airways rose as much as 8.1 percent in London trading after the carrier said hedging oil costs will lower the effect of higher prices this year. Every US$1 climb in oil will slice 8 million pounds (US$16 million) from earnings, down from an earlier forecast of 16 million pounds, British Airways said. Chief Executive Officer Willie Walsh said fare increases were "inevitable" as the industry faced its "worst trading environment" in history.
Walsh said this week he started talks to combine BA with Madrid-based Iberia to lower spending on planes, maintenance and staffing. British Airways will also file for United States antitrust approval in the next several weeks to deepen ties with AMR Corp's American Airlines.
Investors are "likely to largely ignore the outlook and focus on merger news flow going forward," Chris Reid, an analyst at Deutsche Bank AG, said.
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