May 18, 2007

British Airways posts 4Q loss

LONDON - British Airways PLC on Friday admitted anticompetitive behavior while posting a net loss for its latest quarter. The airline said it has earmarked 350 million pounds ($690 million) to cover fines that are likely to stem from an investigation into whether senior staff had discussed fuel surcharges on tickets with rivals, after acknowledging "breaches" of policy.

BA reported a net loss of 124 million pounds ($244.5 million) in the fourth quarter, compared to a net profit of 80 million pounds ($157.8 million) a year ago, after threatened cabin crew strikes in January and a new British tax on flights bit into the carrier's bottom line.

Revenue dropped 6 percent to 1.9 billion pounds ($3.8 billion) after thousands of passengers canceled their reservations before the strike was dropped, costing the carrier 80 million pounds ($157.8 million).

BA's stock was down 3.3 percent in midmorning trade on the London Stock Exchange.

BA noted that it had experienced "unprecedented disruption" over the whole year, including several labor disputes and a weaker U.S. dollar. A terrorist alert at Heathrow last summer grounded hundreds of flights and led to higher security costs.

Full-year profit was down 35 percent at 304 million pounds ($599.5 million), despite a 3.4 percent uptick in revenue to 8.5 billion pounds ($16.7 billion).

The carrier also has further threats looming in the form of fierce competition on its key trans-Atlantic route following the "open skies" agreement to liberalize the allotment of airport slots among international carriers.

"BA seems determined to do things the hard way and today's figures summarize a difficult year," said Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers.

However, Hunter added that the shares had been supported by BA's focus on increasing margins, particularly via its "premium cabin" strategy and the potential offered by the new Terminal 5 at Heathrow Airport, which is due to open in March 2008.

The airline is being investigated by British and U.S. authorities over the allegations of price fixing. If found guilty of breaching antitrust rules, it could be fined either up to 10 percent of sales on its lucrative trans-Atlantic routes or 10 percent of its total group sales.

Two senior executives quit in October after being linked to the investigation. Chief Financial Officer Keith Williams said the investigations were "unlikely to be resolved for some time."

BA also announced that it had placed an order for eight Airbus A320 aircraft, for delivery in 2008-2010, as its renews its short-haul fleet.

On the Net:
Earnings Webcast: http://www.bashares.com

Copyright © 2007 The Associated Press. All rights reserved.


Source: Yahoo! News

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