More Capacity Cuts Ahead At British Airways
Feb 6, 2009
Robert Wall wall@aviationweek.com
British Airways plans to cut capacity in the next winter season, following a 3% drop this winter and a planned 1% reduction in the coming summer season.
The scope of the cut in the 09/10 winter season hasn't been fully set, but the airline plans to reduce its London Gatwick fleet to 32 aircraft from 35, says airline CEO Willie Walsh.
British Airways also has made the decision to sell its 11 Boeing 757s, replacing them starting late this year with A320 family types, which should help bring down capacity.
The 757 decision also has an impact on BA's Open Skies subsidiary, that connects New York with Paris and Amsterdam. The subsidiary's growth had already been frozen, but two of the BA 757s were eventually slated to go to Open Skies.
The third quarter results released today show an operating profit for the first nine months of 89 million pounds, down from GBP744 million for the same period last year. BA has already adjusted its full year guidance, warning of a GBP150 million operating loss.
Despite having been caught with high fuel hedges that haven't allowed BA to fully take advantage of currently low prices, Keith Williams, the airline's chief financial officer, notes that for the year, the hedge book remains positive. Moreover, the carrier has recently taken more hedges, improving its hedged fuel price going forward to around $84 per barrel from $96.
On merger talks with Iberia, Walsh notes that there has been considerable progress. Although a deal isn't imminent, he adds that the two airlines are "getting to a point where an agreement is definitely possible."
Despite talks in the U.S. about closer review of alliance agreements - driven by Rep. James Oberstar (D-Minn.) - Walsh doesn't see that hurting his airline's efforts to seek anti-trust immunity with American Airlines and Iberia.
Looking ahead, British Airways also notes that is has completed the design and certification of its new first class product offering. It should be introduced next year on Boeing 777-300ERs.
Photo credit: Boeing
