This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx /-------------------- advertisement -----------------------\ Explore more of Starbucks at Starbucks.com. http://www.starbucks.com/default.asp?ci=1015 \----------------------------------------------------------/ British Airways Posts Quarterly Loss August 1, 2003 By ALAN COWELL LONDON, July 31 - Just one day after it resolved a costly labor dispute, British Airways reported its worst quarterly loss today and said a major strike in mid-July would cost up to $65 million. Like other airlines, British Airways, the largest European airline, has lost business because of the war in Iraq, the effect of the SARS virus on air travel and a general economic slowdown, even as low-cost airlines like EasyJet and Ryanair lure European passengers with low fares. (Ryanair offered tickets from Stansted Airport near London to Eindhoven in the Netherlands for as little as $3.20, plus taxes.) British Airways said today that its net loss for the first quarter ended June 30 was £63 million ($101.5 million), in contrast to a net profit of £40 million in the period a year ago. Not only that, it said a wildcat strike by check-in staff at Heathrow Airport in mid-July would cost up to $65 million. Analysts said the strike could tip the airline's annual loss to its worst since it became private 16 years ago. Rod Eddington, the chief executive, said on a conference call today that the strike was "terrible for customers, terrible for B.A. staff and terrible for the business." The walkout forced the cancellation of 500 flights in a dispute over the introduction of an electronic swipe-card for staff to clock in and out of work. The airline and labor unions agreed to a compromise settlement to the dispute this week. Mr. Eddington said the newest losses resulted from "the most testing period in aviation history," but insisted that British Airways would not be distracted from a major cost-cutting effort that has trimmed over 11,000 jobs since August 2001. European airlines are expected to report losses of up to $2.5 billion this year, but many analysts said British Airways is cutting costs more decisively than its European rivals. Despite the losses reported today, the company's share price rose as investors took heart from an assurance by Mr. Eddington that the company would meet its cost-cutting targets. Recovery "is going to happen first and faster than at other airlines," said Andrew Light, an analyst at the Smith Barney unit of Citigroup, while the losses were as steep as some analysts were expecting earlier this month. According to British Airways, some £79 million of losses resulted from a single write-off associated with the sale of its Deutsche BA subsidiary last year. The company acknowledged, however, that first- quarter sales fell 11 percent, to £1.8 billion as it lowered fares to lure customers after the war in Iraq. British Airways seeks the bulk of its revenue from high-end business travelers, mainly on the trans-Atlantic route to the United States. "You have got an aggressive restructuring that, if anything, is ahead of plan," Mr. Light said. "Already the Atlantic route is doing quite well and the rise in the stock markets and corporate earnings suggests that business travel should start to recover." British Airways said its costs in the first quarter were 5.4 percent lower than one year ago and it is on track for further cost reductions by March 2005. Andrew Green, a fund manager at SG Asset Management, said investors had looked beyond today's losses partly because the Deutsche BA write-down was a "book loss" while British Airways itself was cutting costs despite higher fuel bills and generating cash. "You are getting all that when the aviation cycle is at its lowest and the only way is up from here," he said. "It's a bit of an abnormal period and people don't expect conditions to be like this again." http://www.nytimes.com/2003/08/01/business/worldbusiness/01BRIT.html?ex=1060745801&ei=1&en=184729c16c4841e4 --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! Click here: http://www.nytimes.com/ads/nytcirc/index.html HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2003 The New York Times Company