BA posts falling profits

November 6, 2001 Posted: 1201 GMT

LONDON (CNN) -- British Airways has posted a 73-percent fall in its second-quarter operating profits and warned it expects a "significant" operating loss for the year.

BA  (BAY) , Europe's largest airline, said on Tuesday its fiscal second quarter operating profit had fallen to £72 million ($105 million) from 264 million a year ago in the wake of a global economic slowdown.

BA CEO Rod Eddington warned life could become tougher in the months ahead. "Like all airlines we look forward to the next one, two, three months without any great confidence," he told CNN.

Passenger numbers for BA have tumbled 25 percent year-on-year in October -- reflecting a slump in demand for air travel in the wake of the September 11 attacks in the U.S. -- but the result was better than most market estimates.

Most analysts tipped the market falling around £30-40 million ($44 - 58 million for the three months ending September 30, compared with £264 million a year earlier.

BA, which relies heavily on transatlantic routes for its profits, last month ruled out paying an interim dividend and told investors a final dividend was in doubt unless the market improved.

"We are looking hard at what we need to do. It may be necessary to look again at the number of people we employ. If that's necessary we will be working with unions and staff to move forward in a sensible way," Eddington said.

He said that "no frills" airlines were now playing an important role in the industry and large carriers like BA needed to learn how to compete. "We believe passionately that the market should decide who wins and who loses."

The airline said its passenger yields -- a key measurement of average revenue per passenger kilometre -- were up 6.1 percent in the six months ended September 30.

Its cash balance was in excess of £1 billion, the airline said in a statement.

Eddington also spoke out against subsidies for failing airlines and said that BA would be pursuing opportunities for consolidating its business in Europe.