I am sure most peeps will know this is my favourite airline - I fly them and I buy them.

Currently I hold a quarter unit as a longer term investment which is also useful for shareholder benefits.

I will be looking to substantially add at the right time and not afraid to trade them either intraday or more probably as a swing trade.


ains




Shadow of conflict looms large over British Airways as firm fights to recover

TRACEY BOLES - Scotland on Sunday

BRITISH Airways will warn that the prospect of war with Iraq casts a long shadow over its full-year this week when it posts third quarter figures in line with expectations.

Lord Marshall, the BA chairman, is expected to tell analysts that political uncertainty could push the airline, still struggling to recover from the effects of September 11, further into reverse.

"Iraq is a key driver for everything," said a source close to the airline.

BA has admitted privately to analysts that transatlantic bookings for this March are "appalling" as the uncertainty stirred up by the prospect of war exerts an influence. Earnings estimate downgrades are now highly likely.

However, analysts believe a loss for the full year is still not on the cards.

Pre-tax estimates for the full year currently stand at up to 140m. BAs performance, which represents a strong recovery from the 180m loss posted in the equivalent quarter after September 11, has been driven by a vigorous cost-cutting programme rather than by revenue, which is still flat.

It will announce tomorrow that it is on track to achieve cost savings of 450m by the end of March through a process of shedding jobs and loss-making routes under its future size and shape strategy.

By the end of next month 10,000 jobs will have gone under the programme. "BA has weathered the storm better than most by getting costs under control," said one analyst. "In Europe, only Iberia has done likewise."

Third quarter operating profits are expected to be around 30m to 40m, in line with analysts expectations, with pre-tax figures between a 10m loss and 5m profit. The consensus is break even.

The airline has impressed experts by taking the threat posed by low-cost carriers seriously.

Geopolitical and economic problems are affecting demand air travel, especially on long-haul routes. BAs premium services are still under pressure, recent traffic figures revealed.

A speedy Gulf war will lead to a relief rally for the airline sectors shares which are depressed at the moment. However, BA itself has warned that prolonged conflict could trigger a slump in aviation equivalent to that seen after September 11.

Chris Tarry, former aviation analyst at Commerzbank who now runs CTAIRA said: "I believe that the last quarter has been very tough on the revenue side and indeed they have indicated this themselves.

"Unfortunately the outlook is no better - even without a war. The reality of the economic situation in the UK was underlined with the rate cut.

"Add to that the structural downward shift in fare levels and then the uncertainty over war - it doesnt bode well.

"Furthermore, given the uncertainty caused by Iraq let alone an actual war, it is pretty clear that the transatlantic market will be dire in the summer."

BA has traditionally depended on transatlantic traffic for its revenue.

Shells chairman, Sir Philip Watts, also admitted last week that the oil giant was preparing for "uncertain times" ahead.

He said Shell had looked at the range of possibilities that could occur and had "a plan for every eventuality".

Brillant stuff from Rod Eddington. War with Iraq would shave 10-20% of passenger numbers. Rod Eddington and Co must believe they have already been through World War III without the French!! Target price now around 43.5p

The reality is that passenger numbers in the industry whilst dented short term by a war, will continue to soar over the next 5 years and very few of them will be getting on a BA flight.

BA has no future within that timescale, the extinction of the dinosaur story will not arouse much interest second time around. Take a few paracetamol if the whines of management and shareholders get too much. Take comfort in the fact that by definition a terminal decline must have an ending.

Ainsoph, have you ever been on an aeroplane? What do you like most about BA? Why dont you post a photo of urself, we'd all love to put a face to the abuse!!

I`m short on this , and tomorrow will be the big- dipper I reckon

ps not a full unit short though,

Is ainsey still a quarter short of a full unit?

Possibly a unit short of a full quarter, but don`t quote me on that

The threat of war is making the outlook bleak for British Airways.After its investor briefing last week,many believe it will be lucky to break even in the coming financial year.

The struggling carrier is on track to report 130m pretax profits in the year ending this month,despite a 7pc decline in sales.That follows tough action from chief executive Rod Eddington,who has cut 1.1bn or 11pc off costs. But the fall in traffic is undoing his good work,and he is targeting another $450m savings in two years.

Citgroup analyst Andrew Light predicts just 22m net profits for the coming year.This assumes another 1pc fall in sales.
That leaves the airline,ejected from the FTSE 100 index again last week, vulnerable if sales fall further.

Every 1pc decline in revenue would take 50m off pretax profits.

Industry sales fell 5pc during the year of the last Gulf War.This time is worse. Sales of premium tickets are already 20pc below the peak two years ago.These provided nearly half BA`s revenues. September 11 left the industry in turmoil,while budget carriers are grabbing business.

BA has debt of 5.1 Billion and owes another 1.1 Billion in off-balance sheet leases,secured on planes.

Amazing its holding up so well considering, I thougt 80p would have been the level today, soon will be .

Ainsoph,

Hello me old mucker, I'm back and fighting.

Regards,

Wordy

I see a bit of profit taking dropping this 4/5 % pretty soon, as I am short that will be a blessing.

Hello Wordy ..... good to see you back .... and winning I hear :-))


Pleased I didn't listen to the short peeps and now well up on my recent trades (30% maybe) ..... lots of news and broker upgrades over the last few days. I have been sampling their European service over the last few days (spending some of the profits) and the service was excellant - everything running to time with good people looking after us .... and that's what counts.

Today's big news is the aftermath of the German let down and the need to start talking to other interested parties ... at least they made the 6 million.


ains



Merrill Lynch returned from the company's annual investor day and repeated its "buy" recommendation. "BA is totally realistic about the challenging trading outlook and management had a credible plan to address this. It has identified and quantified yet further cost reduction opportunities," Merrill analyst Anthony Bor said.

Schroder Salomon Smith Barney maintained its 'in-line' rating on the UK airline with a 'post-war/no war' target price of 200 pence. The US broker said BA's 'Investor Day' was as expected in terms of content and openness, with the airline's restructuring plan on target, and operating expenses already 1.1 bln stg lower in the current year than they were in the previous one. Schroder Salomon added that its earnings forecasts for BA, which it lowered earlier this week, remain intact. The broker concluded that BA remains its top pick for the next cycle on the basis of its strengthening balance sheet, vigorous restructuring efforts and high revenue exposure to the US and Middle East markets.

However, Schroder Salomon said BA's short term price movements are currently at the mercy of political developments. Elsewhere, UBS Warburg also reiterated its 'buy' rating on BA shares in comment this morning, although it said it has cut back its target price to 150 pence from 200.

By Jonathan Stempel
NEW YORK (Reuters) - Credit rating agency Standard & Poor's has said it may cut its ratings for 11 airlines and 14 aerospace companies because a U.S.-Iraq war looks "imminent".

Nine U.S. airlines, including three of the five largest -- Delta Air Lines Inc., Northwest Airlines Corp. and Continental Airlines Inc. -- as well as European carriers British Airways Plc and Deutsche Lufthansa AG are covered by the airline review. S&P said it may cut British Airways to "junk" status.

"Airlines, particularly large U.S. hub-and-spoke airlines, have already been hurt by high fuel prices, an accelerating erosion in bookings on international routes, and, indirectly, by the depressing effect of uncertainty on business activity," S&P analyst Philip Baggaley said in a statement. A war would cause "further financial damage," he said.

The credit rating agency's review of aerospace companies includes Boeing Co. BA.N , the world's largest commercial aircraft maker, and European Aeronautic Defence and Space Co. EAD.PA EAD.DE , which owns most of Airbus SAS, Boeing's largest rival.

United Airlines Inc., a unit of UAL Corp. UAL.N , warned for the first time on Tuesday that there is a "distinct possibility" that it may go out of business. Some analysts, meanwhile, have said AMR Corp. AMR.N unit America Airlines Inc., the world's largest airline, might soon follow United and US Airways Group Inc. UAWGQ.OB into bankruptcy court.

Transportation Secretary Norman Mineta on Tuesday acknowledged a war might hurt U.S. airlines, and said the government is ready to assist them if necessary.

S&P said it may downgrade AirTran Holdings Inc. AAI.N , Alaska Air Group Inc. ALK.N , America West Holdings Corp. AWA.N , ATA Holdings Corp. ATAH.O , Atlantic Coast Airlines Holdings Inc. ACAI.O , British Airways BAY.L , Continental CAL.N , Delta DAL.N , Deutsche Lufthansa LHAG.DE , Northwest NWAC.O and Southwest Airlines Co. LUV.N .

The aerospace review includes Argo-Tech Corp., Boeing and its Boeing Capital Corp. unit, Britax Group Plc, Dunlop Standard Aerospace Holdings Plc, EADS, Goodrich Corp. GR.N , Hexcel Corp. HXL.N , K&F Industries Inc., Sabreliner Corp., Sequa Corp. SQAa.N , Textron Inc. TXT.N and its Textron Financial Corp. unit, and TransDigm Inc.

S&P analyst Roman Szuper said the operating environment for airline equipment and aftermarket suppliers is "very challenging," especially in the United States, and will likely weaken in the near term if war breaks out.

HUB-AND-SPOKE OPERATORS UNDER PRESSURE

British Airways, Lufthansa and Southwest carry "investment-grade" ratings, while the other carriers are "junk" rated. S&P downgraded 11 U.S. airlines' aircraft-backed debt on Feb. 18 and has said it may downgrade other airlines, including aircraft-backed debt of American, United and U.S. Airways.

"Hub operators are under severe pressure, and their credit statistics and liquidity positions are getting weaker," said Brian Clapp, an analyst at Muzinich & Co. in New York, whose $3.5 billion of junk bonds include Continental, Delta and Northwest debt. "This has been the case pretty much since the summer of 2001, even before 9-11."

Downgrades often boost borrowing or refinancing costs.

S&P rival Moody's Investors Service on Monday said it may downgrade Delta, Northwest and Continental, which rank Nos. 3, 4 and 5 among U.S. carriers.

"Investors should stay away from unsecured airline debt until you see passengers start to come back, or if a UAL liquidation sends passengers elsewhere," said Clapp.

Baggaley said even if the United States and its allies enjoyed a quick victory against Iraq, and no significant terrorist attacks took place, airlines would likely still suffer substantial losses, and fuel prices would be likely to fall more slowly than they did after the 1991 Gulf conflict.

Regional carriers and low-cost carriers such as Southwest, which is profitable, are less likely to suffer from declining passenger traffic, S&P said. Major U.S. carriers lost more than $11 billion in 2002.

moving down nicely now, next stop 1 and then less, watch out for the announcement that the war is `go` if your short, all their `planes will be grounded, and 60p for a short time seems likely

Must admit to taking a few profits and now waiting to buy back .... anyone waiting for 60p will have a long wait in my view ....


ains

I would never of course enter into an argument with ains, he is unbeatable, but if the war turns nasty, we will think 60p was a high.

interestingly, I do always seem to do a lot better than the shorters .... when I bought at just below 90p last week - peeps were talking of silly downsides ... but sold them for a masive gain just a few days later ....



ains

Pulling back earlier mark downs


03/19 08:48
British Airways, Rivals' Stocks Drop on Possible S&P Downgrades
By Lois Jones


Frankfurt, March 19 (Bloomberg) -- Shares in British Airways Plc and its three biggest European rivals plunged after Standard & Poor's placed European and U.S. carriers on review for a possible credit-rating downgrade amid concern a war in Iraq would raise fuel prices and damp demand.

British Airways shares dropped as much as 7.5 pence, or 6.4 percent, to 110p. Air France SA shares fell as much as 38 cents, or 3.7 percent, to 9.83 euros. Deutsche Lufthansa AG shares fell as much as 43 cents, or 4.7 percent, to 8.65 euros. KLM Royal Dutch Airlines NV stock plunged as much as 39 cents, or 6.1 percent, to 6 euros.

S&P said it may downgrade British Airways, Lufthansa and nine U.S. airlines' ratings as an Iraq war would further damage an industry that's already reeling from losses and traffic declines following the Sept. 11 terrorist attacks.

``Airlines, already battered by the effects of the Sept. 11, 2001, attacks and their aftermath, now face further financial damage from a war,'' said Standard & Poor's credit analyst Philip Baggaley in an e-mailed statement.

A war in Iraq may reduce Lufthansa's traffic by as much as 20 percent, Lufthansa Chief Executive Juergen Weber has said. Lufthansa said on Feb. 26 it will ground 46 planes, reduce investment by 200 million euros ($213 million) and freeze hiring. The carrier is raising fares by an average 4.5 percent as the threat of an Iraq war boosts fuel costs.

In addition to British Airways and Lufthansa, S&P placed the following airlines on CreditWatch, indicating possible downgrades: Delta Air Lines Inc., the third-largest U.S. carrier; No. 4 Northwest Airlines Corp.; No. 5 Continental Airlines Inc.; AirTran Holdings Inc.; Alaska Air Group Inc.; America West Holdings Corp.; ATA Holdings Corp.; Atlantic Coast Airlines Holdings Inc., and Southwest Airlines Co.

I shorted at 108p, and am happy to await really big profits, I rarely stop a short for less than 50% profit in these `bad` (for some ) markets.
I realise ains will make a lot more than I as he uses huge sums of money on his investments, I rarely risk more than 50,000 on any one shot, using other shares as colateral, so no cash ever changes hands, exept generally into mine.

You're quite a small player then, quidnunc. From earlier comments I thought you were playing for more than just pin money.

Yes , just a tiddler compared to ains

A three % drop so early in the day is encouraging, the war will start tomorrow mid-day we are informed, so any one long , be careful.