Recent problems with the new T5 Terminal at Heathrow have resulted in more problems for BA when will they recover their No1 position.

jkd,
Longterm am very bullish on this stock,seems that the market recieved the dreadfull quartely results by marking them up slightly.
I do belive that if the merger falls through with Iberia we will see further lows,and there is bound to be strife internally as more cuts are being sought .

I continue to add as and when funds permitt,BA will survive.,having said that i became a buyer of BA after sept 11th and wish i had sold the lot @400p and got back in now.
good luck JKD.

c
this is now starting to look bullish to me, so i have now reinstated my short, with a tight stop loss. have meddled. looking now at break even on both shorts if possible,could be wrong.
regards and good luck to you.
jkd

ive been stopped out of both my shorts today. one at small loss the other at a small profit.
good luck and regards
jkd

jkd
Bad luck with your short,see the sp has risen well in percentage terms,it will fall like a stone if the IB merger fails,i pray this will not be the case.

thanks c
good luck with your holding i hope all goes well.
regards
jkd

Here's a snippet from the Blue Index blog

British Airways Weakness
April 27th, 2009

The prospect of falling victim to a further mutation of Avian Flu, namely Swine Flu sounds horrifc and conjurs up all sorts of nightmare imagery

However you feel about potentially profiting from this sort of crisis, British Airways (BAY) is potenially looking weak after negative press and pundit commentary over air travel. Blue Oar Securities Mark Brumby says, Without scare-mongering, it is worth pointing out the current outbreak of swine flu, which is centered on Mexico but which has spread to the US, is unlikely to do much to encourage travel. He adds In recent years the SARS and avian flu scares have depressed travel volumes materially. British Airways operates four flights a week to Mexico City, said this morning it is operating as normal.

Full article here
http://blog.blueindex.co.uk/2009/04/british-airways-weakness/

British Airways dives into the red
Business Financial Newswire

Flag carrier British Airways reported an operating loss of 220m, including restructuring costs of 78m, for the year to March.

The pretax loss was 401m, compared to a profit of 922m in the previous year, with fuel costs rising to nearly 3bn.

Revenue rose to 8.992bn (8.758bn - 2008) in the period.

Full year revenue was up 2.7% to just under 9bn (including 109m arising from a change in estimation basis for unused tickets). Excluding year on year exchange effects, underlying revenue was down 3.7%.

Passenger revenue rose 3.1% to 7.8bn, on capacity down 0.7%. Seat factor was down 2.1 points to 77%.

Yields, however, rose 6.7% as a result of currency impacts. At constant exchange, passenger yields were broadly flat.

The economic downturn led to a significant fall in global demand for premium travel, with IATA premium traffic down around 14% in the second half of the year. Premium traffic volume, which started to see some weakness back in August, has steadily declined in the second half in response to the economic slowdown.

Total traffic, measured in revenue passenger kilometres, was down 3.4%. Total passengers carried fell by 4.3% to 33.1 million.

British Airways' CEO, Willie Walsh, said: 'Reduced passenger and cargo demand and high fuel prices last summer contributed to our 220m operating loss as our total fuel bill reached almost 3bn. The prolonged nature of the global downturn makes this the harshest trading environment we have ever faced and, with no immediate improvement visible, market conditions remain challenging. It is vital, therefore, that we remain absolutely committed to our plans to establish British Airways as a high-performing, market-focused, global premium airline.

'We are taking action to mitigate the impact of the economic crisis on our business. Next winter we will continue to reduce capacity by taking out 4% of flying compared to last year, parking up to 16 aircraft.

'We are taking action on non-fuel costs too. In addition to reducing external spend and not paying management bonuses, there are no base pay increases planned and we are offering staff the option of unpaid leave and temporary or permanent part time working. We are also in talks with our trade unions about pay and productivity changes. The results for the year include 78m of redundancy related costs. Since last summer, our overall manpower has fallen by more than 2,500.'

From the Blue Index blog

British Airways and the Perfect Storm
May 22nd, 2009

On April 27th I wrote about British Airways (BAY) weakness, see British Airways Weakness as regards the swine flu outbreak, but I suggested watching out for a sharp rebound in the event of positive news.

Shares did recover somewhat, but today that positive news seems a long way off, after the flagship carrier scrapped its dividend and reported a GBP358m full year net loss, against a GBP712m profit last time. Although revenues did improve by 2.7% to GBP8.76bn, BA was hit by last summers high fuel prices and a slump in passenger and cargo volumes, while net debt nearly doubled to GBP2.4bn against GBP1.3bn last time. CEO Willie Walsh said today the current conditions were the harshest we have ever faced, and added that with no immediate improvement visible, market conditions remain challenging. BA will cut further costs going forward, and merger talks with Spains Iberia, which have been going for almost a year, will still take several months to conclude.

Full transcript here
http://blog.blueindex.co.uk/2009/05/british-airways-and-the-perfect-storm/

Willie go or will he stay? When is BA going to find somebody big enough to run this business or is it the plan to dr(i)ve it into the ground?

Dear all on BAY thread...

I noted in the paper that BAY had made a cumulative 3bn pretax profit between 2002-2008 inclusive yet they only declared a dividend for last year. My question is this....Lets say tax at 33% leaves 2bn net profit, what did they spend it on?

thanks for any help

bonfield

Jetting off abroad this summer? Find out what youre entitled to if it all goes horribly wrong.


I have a friend who's been chasing a flight refund for several months now. She's come up against a barrage of re-directed calls, administrative incompetence and contradictory instructions.

In this case, the airline has actually acknowledged that the refund is due - so I can only imagine how difficult they'd make it they disputed her claim!

I've had some pretty dire experiences with delayed and cancelled flights (haven't we all?) and I'm always surprised at how little compensation customers are actually entitled to.

With many of us jetting off on holiday in the next few months, here's a guide to what you can claim if it all goes horribly wrong.

Baby steps
Under EU law, airlines are not obliged to give compensation for cancelled flights if they offer suitable alternative travel arrangements or if 'extraordinary circumstances' apply.

In the past, airlines have been accused of defining technical faults as extraordinary circumstances, to avoid having to shell out.

However, earlier this year, the European Court of Justice closed this loophole. In a new ruling, it deemed that airline passengers are now entitled to compensation when a flight is cancelled because of a technical fault.

The ruling applies to all EU-based airlines and to all airlines when operating a flight out of an EU country.

It's a baby step on the road to airlines treating customers more fairly - but at least it's one in the right direction.

Do you meet the following criteria?
The Denied Boarding Regulation (otherwise known as EC Regulation 261/2004) came into force at the beginning of 2005. In a nutshell, it offers an improved framework for people whose flights have been delayed or cancelled to claim compensation refunds and/or compensation.

For you (as the customer) to be legally protected by this regulation, the following criteria must apply:

You need to have a confirmed booking;
You need to have checked in on time;
You need to be departing from an EU airport, or from a non-EU airport and flying into an EU airport on an airline with its headquarters and main place of business within the EU.
Assuming that you meet all these criteria, here's what you're entitled to:

If your flight is delayed
Sadly, you probably won't be entitled to financial compensation. What you can claim depends on how long you're kept waiting, and how far you're travelling.

There are four main 'time + distance' categories defined:

A flight under 932 miles which is delayed for more than two hours;
A flight within the EU which is longer than 932 miles, and which is delayed by more than three hours;
A flight which isn't within the EU, which is between 932 and 2174 miles, and which is delayed by more than three hours;
Any other flight which is delayed by more than four hours.
If your delay falls into any of these categories, here's what you're entitled to:

Two free phone calls, faxes or e-mails;
Free meals and refreshments appropriate to the delay.
That's it. Not great, eh? And of course, 'appropriate to the delay' is a very subjective and foggy concept.

If you're delayed overnight, the airline must also put you up in hotel accommodation - and provide the transport for you to get there and back.

And finally, if you're delayed for more than five hours, you can decide not to travel at all, and get a refund. I think that's pretty poor consolation for a wasted day and no holiday, personally.

If your flight is cancelled
If your flight is cancelled after you've arrived at the airport, you should be offered a choice of the following:

A refund of the full cost of the flight, within seven days;
A re-routed journey to your final destination at the earliest opportunity;
A re-routed journey to your final destination at a later date convenient to you.
As you can imagine, that 'earliest opportunity' is another grey area and inevitably introduces another set of frustrating variables.

The compensation conundrum
Even if your flight is cancelled at the last minute, you're not necessarily entitled to compensation.

Simply put, you don't have a right to compensation if you're offered the chance to re-route on a flight that leaves no more than one hour before the original flight and is scheduled to arrive no more than two hours after the original flight.

And of course, there are those 'extraordinary circumstances' to contend with. You're not entitled to compensation if the airline can show that the cancellation was caused by 'extraordinary circumstances that could not have been avoided even if all reasonable measures have been taken'.

In plain English, this could mean anything from snow and political instability to terror alerts and strike action.

How do I make a claim?
If you are entitled to compensation, the specific amount will depend on the distance you were intending to travel, and the suitability of any alternative flight you're offered.

For a breakdown of the sums involved, have a look at this Which? Advice page on how much you can claim.

If you decide to pursue the matter, the how to make a claim section also suggests the action to take, and includes some useful template letters to get things started.

Unfortunately, I can't cover every eventuality in a single article. For example, slightly different rules apply to flights that have been overbooked - and flights that are cancelled more than seven days in advance.

BA in a tailspin "fighting for survival" according to "wee willie".Is this the beginning of the end of BA as we know it?

Halifax, I think BA will be a VERY STRONG SELL now at 136p.

i'm buying the company tomorrow then, lol

williw walsh sounds terrible on tv when he appears.......how come so many huge companies have wallies as chief executives etc

British Airways unions reject 'no pay' call

Have you bought BAY yet, marni, or is this just talk as usual?

i was poking fun at u but u r obviously too thick to see that.

bay need to get rid of that dreadful walsh character.

at least i buy shares unlike you.......you just steal shares hyleo but seem to be losing heavily on yell, smdr, rbs etc

It's good to see BA is on the verge of going BUST...



Could British Airways really go bust or not?


It was close to midnight when Willie Walsh finally emerged from Waterside, British Airways sprawling Heathrow headquarters. The airlines chief executive blinked in the lights of the waiting television crews, cleared his throat, and started to speak, his voice trembling.

I am sorry to say that despite our efforts today we have been unable to secure further funding from our banks. The cash drain we sustained as a result of the rolling programme of industrial action by cabin crew and ground staff means we can no longer continue as a going concern. British Airways has this evening been put into administration.

This may seem a far-fetched scenario, but not according to Walshs own doom-laden forecasts. BA is in trouble, with recession and the banking crisis banks accounted for nearly 40% of BAs business-class traffic pushing it to its worst-ever loss in the financial year that ended in March.

In recent weeks Walsh has issued dire warnings to staff, saying that almost all the business is unprofitable, the current awful trading situation will only get worse and that the company faces a fight for survival.

Last week he went farther, inviting all employees to work for a month without pay following the example set by himself and Keith Williams, the finance director. Staff have even been asked to drum up business by selling tickets to friends and family under the companys Hotline scheme, with special cheap fares being made available last week.

In an intranet message, the company told workers: Time is running out.

So is it really all over for BA? Is the worlds (former) favourite airline, Britains (former) national flag carrier and the (former) operator of Concorde really heading for the scrap-heap?

Seasoned airline watchers say not, accusing Walsh of having an ulterior motive. His apocalyptic missives, they say, are designed to soften up BAs unions during crucial talks about cost-cutting.

Walsh wants big concessions and an air of crisis will help. This month has brought voluntary pay cuts from pilots and engineers (pilots still have to vote on the plan), but the battle continues with ground staff and cabin crew. Walsh wants it sorted out by June 30. Industrial action this summer cannot be ruled out.

Walsh has another audience in mind, too, governments and regulators on both sides of the Atlantic. BA is trying to stitch together a merger with Iberia, the Spanish airline, and a strategic alliance with American Airlines. The latter, a deal that would leave BA and American free to collude on price and scheduling on Atlantic routes, faces a rough ride from competition watchdogs. Its fate is in the balance, with a decision expected in a few months.

BAs management would also like some breathing space from the British government on a swingeing rise in air passenger duty, which the airline claims leaves it at a competitive disadvantage to its rivals.

In my view, he is attempting to manage the expectations of staff. His view is that there is a serious structural shift here, not just a cyclical blip, said Douglas McNeil, transport analyst at Astaire Securities, the investment bank.

Other airline bosses say that if Walsh is crying wolf, he is taking a big risk. Either they are in that kind of trouble, and could go bust, or they are not, and are trying to pull the wool over peoples eyes. You dont ask staff to take a one-month pay holiday and risk having those kind of headlines unless its serious. If you do, its a very dangerous game, said Sir Richard Branson, founder of Virgin Atlantic, BAs biggest rival.

There may be more to this than a none-too-subtle attempt to frighten the awkward squad. Evidence can be found in the boom-to-bust nature of the airlines trading over the past two years.

BAs big strength has always been the Heathrow hub and its dominance of the lucrative business traffic across the Atlantic. In 2006-7, the final year of the financial-services boom, BA posted a record result. Corporate lawyers, merchant bankers and other masters of the universe thought nothing of paying 4,000 and more for a return trip to America, and the cash rolled in.

The airline announced a record profit of 922m , achieved an operating margin of 10% (something that had eluded BA managers for the previous two decades) and paid a dividend to shareholders for the first time since 2001.

Then the music stopped. The credit crunch and recession revealed the reliance on Heathrow and Atlantic business traffic to be not a strength, but a weakness. Business traffic dried up with companies, and in particular the big banks, slashing their travel budgets.

Companies are travelling less, and spending less per trip, said Amon Cohen, a business travel expert and contributing editor of Business Travel News. With so many empty seats, airlines are falling over themselves to offer discounts of as much as 70% in business class. Looking ahead, it does not get much brighter. A survey of British corporate travel buyers published by the Institute of Travel & Meetings last week found that three-quarters of them expected their spending to fall even farther over the next 12 months.

BAs results for the 2007-8 financial year showed how hard and fast the downturn had hit. The airline recorded a 401m loss 331m of which came in the final quarter of the year alone and scrapped the dividend.

BAs lifeblood premium traffic first and business class fell 17% in April, and by the same amount in May. Business-class fares across the Atlantic have dropped sharply.

In an intranet posting to staff last week, the airline said: Many First or Club passengers are on greatly discounted fares that the airline has introduced to keep people flying. Currently there are Club World offers at 1,100 for Heathrow to New York return and some are travelling free (2 for 1 offer).

Walshs problem is that BA is set up to make money at 4,000 for a return ticket to New York, not 1,100. He must now convince the airlines unions that the current drop in traffic is not just a temporary blip, but, as he puts it, a structural shift in the nature of our business.

Time is not on his side. The airlines cash balances are dropping, down from 1.8 billion last year to 1.3 billion at the end of March. This could be completely used up by the companys outgoings as currently scheduled 750m of capital spending, debt repayments of about 650m and interest charges of 150m.

There is little fat for Walsh to fall back on. Much of the companys property was sold during its last restructuring, the so-called Future Size and Shape programme put in place by Walshs predecessor, Sir Rod Eddington. The worldwide airline slump means it is hardly worth selling aircraft.

In other industries, companies under pressure are raising cash as fast as they can to tide them over the downturn, either increasing their bank borrowings or asking shareholders to back rights issues.

BAs board would probably opt for the latter, although analysts think there needs to be a successful resolution of the industrial talks before a fund-raising could go ahead. You need to have a recovery story to tell, and that means having big cost reductions in the bag, said one City source.

Walsh will move heaven and earth to preserve the airlines cash by cutting spending, but he might find himself on a slippery slope if the companys position deteriorates further made worse, perhaps, by industrial unrest, worsening swine flu or terrorist action.

Bankers point to the examples of Sabena, the Belgian airline, and Swissair, both of which came to grief in the slump that followed the September 11 terrorist attacks.

It can run away from you. There is a minimum cash level in BAs case I would say its about 500m after which the banks start to tighten the screws, suppliers get nervous, the public gets nervous and your need for funding balloons out of control, said one senior banker who worked on the restructuring of Swissair. IF BA were to get into serious trouble, a rescue would be far from straightforward. The board could seek a white knight, but there are two obstacles to a bid.

First, any buyer must be majority-owned and controlled by European nationals, a prerequisite of BAs traffic rights. This would probably rule out Arab or Asian sovereign wealth funds, which otherwise would be tempted by such a prestigious brand.

The second obstacle is more daunting. BA has a large pension liabilities. An actuarial review of its two defined-benefit schemes is under way, with a final figure on the size of the black hole expected in September. Some analysts think it could be as much as 3 billion, nearly double the companys 1.57 billion stock-market value.

Administration, which would allow the airline to shake off the pension fund, is also problematic, thanks to the industrys regulated nature.

For an airline, administration would normally mean immediate revocation of its operating licence and the loss of its runway slots BAs most precious assets.

Airlines cannot do business without an operating licence and an air operators certificate, which are granted in the UK by the Civil Aviation Authority, said Hugh ODonovan, barrister and leading aviation lawyer at Quadrant Chambers.

For the administration to be successful and the business to continue to trade, there must be financial arrangements in place to enable the operating licence and certificate to be maintained.

If they wanted to be sure of the business emerging intact, BAs board would need to have a buyer in place before the crunch came. In other words, BA would have to do a prepack administration, the much-criticised type of insolvency that has come into fashion among retailers since the recession bit.

That kind of crisis may still be a remote possibility. Professional investors certainly think so. Respected analysts believe BA will ride out the recession and, again thanks to its dominant position at Heathrow, be best-placed of all airlines to exploit a recovery.

Andrew Light at Citi rates the shares a buy, with a target price of 260p (the shares closed on Friday at 136p). Andrew Lobbenberg at Royal Bank of Scotland also has a buy recommendation, with a target price of 225p.

Walsh, however, who declined to speak to The Sunday Times this weekend, is still talking down the airlines prospects, with another round of meetings scheduled this week with cabin crew and ground staff.

And it is worth bearing in mind that this recession has already demolished organisations that were thought to be fixtures on the corporate landscape AIG, Lehman Brothers, Chrysler and General Motors.

Could BA join the list?

Branson is definitely right, that's why his business go from strength to strength.



Branson to ministers: let BA go bust


Sir Richard Branson has rubbed salt in British Airways wounds by declaring BA practically worthless, and urging the government to resist any attempts to bail it out.

Bransons comments will incense BA management, which this week will hold vital talks with cabin crew and ground staff over pay cuts, lay-offs and changes to working conditions aimed at saving 100m a year.

Willie Walsh, chief executive, who is trying to stem big losses and has warned that BA faces a fight for survival, wants a deal by June 30.

Branson, who founded Virgin Atlantic, BAs biggest commercial rival, said ministers should not be tempted to step in. It would not be in Britains interest, he said.

We and others are standing by ready to take on their routes and runway slots at Heathrow if they get into serious trouble. I thought the US governments bail-out of the car companies was a bad idea and its the same for BA.

Virgin had looked at a bid for BA, Branson said, but concluded that the companys liabilities in particular its pension deficit were too great.

Its not worth much anymore because of the liabilities. We were thinking about if the shares went under 100p (they closed on Friday at 136p), but it would be better to wait for its demise, he said.

Yesterday a BA spokesman said: This is fantasy. There are no talks with government, and there will be no talks. We have opposed state aid and our position has not changed.

The fraught relationship between the airlines has worsened. Keith Williams, BAs finance director, recently questioned Virgins claims of a profit, saying its figures went into Virgin accounting territory.

It emerged this weekend that Walsh has snubbed a request to give evidence to the House of Commons transport committee on July 1 the day after the deadline for the union talks. MPs are preparing a report on the future of aviation.

Given the extremely wide ranging nature of the subject of investigation which goes far beyond BA he has reluctantly declined, an airline spokesman said.

It's really good to see Walsh is sweating now... and even better when the market opens tomorrow morning.



BA's Walsh leads the way but few follow
Tom McGhie, Financial Mail
21 June 2009, 1:12pm


A rallying cry by Willie Walsh to his 40,000 troops at British Airways to work for free for up to four weeks has met with a less than enthusiastic response.

Only 200 have agreed to forgo pay - and unlike Walsh, who will give up a month's money, they will lose just one week's wages.

The disappointing response follows the announcement last month of a record 401m annual loss.

Insiders called Walsh's pleas a gimmick. 'It was never likely that they would follow Willie's lead,' said one.

Walsh will give up his July pay, worth 61,000. Chief financial officer Keith Williams, who earns 435,000 a year, will also give up a month's salary. The company refused to confirm whether any other directors, including chairman Martin Broughton, who earns 350,000, would follow.

But Walsh has had some success in negotiating with BA's engineers. About 3,000 are believed to have agreed a new pay structure, enabling the airline to make big savings. This follows a deal with 3,200 pilots to cut their pay by about 10% and accept 78 redundancies. In return, they will be given shares worth a total of 13m. Walsh is also trying to secure fresh terms over 4,000 voluntary redundancies.