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British Airways posts $245M quarterly loss

  • Story Highlights
  • British Airways posts pre-tax loss of $245 million in second quarter
  • BA has already cut 1,450 jobs since the end of March. Staff taking pay cut
  • Airline plans to raise nearly $1 billion in emergency cash funding
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LONDON, England (CNN) -- British Airways reported a pre-tax loss Friday of $245 million in the three months till the end of June, contributing to an already-tough year for the troubled airline.

British Airways plans to reduce capacity by 4 percent next winter by parking up to 16 aircraft.

BA has already cut 1,450 jobs since the end of March and has persuaded its pilots to agree to a pay cut. Chief Executive Willie Walsh gave up his July salary to help the airline cut costs.

But BA is still facing the threat of strikes by ground staff, and earlier this month the airline said it plans to raise nearly $1 billion in emergency cash funding to survive the economic downturn.

"Trading conditions continue to be very challenging, with underlying revenue down 16.8 percent and no visible signs of improvement," Walsh said in an announcing the quarterly results. "While traffic volumes are down considerably compared to last year, they have stabilized during the quarter and show some signs of improvement for the peak summer months. However, yields remain volatile."

Walsh said efforts to reduce costs are "beginning to bear fruit," but much more needs to be done.

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The airline is reducing its flying schedule and will park 22 aircraft during the coming winter season, he said. The delivery for its first Airbus A380 aircraft has been put off for about five months, with six more aircraft delayed by about two years, he said.

The results released Friday show total revenue for the three-month period was down 12.2 percent.

Passenger revenue was down 12.5 percent, and cargo revenue decreased by 28.1 percent, the airline said.

Analyst Gert Zonneveld of Panmure Gordon said BA hasn't cut costs enough to offset the fall in revenue. Costs at the airline are down only 3 percent.

"It's not that easy for an airline to take out loads of costs," Zonneveld told CNN. He said fuel and maintenance were examples of costs that are difficult to bring down.


British Airways has managed to increase its liquidity to about $3.3 billion, which Zonneveld said should be enough to see it through the current downturn.

"Obviously, it's a tough time for airlines, and BA is definitely suffering because of that."

Reed Langton-Yanowitz contributed to this report.

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