British Airways fires 3,000 as airline industry turns ugly
Filed under: Economy, Earnings
British Airways lost $485 million for the six months that ended in September. The airline's CEO Willie Walsh told the BBC that this has been the "most difficult year in the history of British Airways". BA is planning to cut 3,000 more workers in an attempt to return to profitability, but the firm's outlook for an improvement in passenger traffic is bleak.
The BA news should not be seen in isolation. After a brief period in which analysts and traders hoped for a full-scale turnaround in the global airlines industry, those sentiments have faded. The dismay is reflected in the stock prices of US-based airlines. Shares of American (AMR) are down about 25 percent in the last month, and most stocks in the sector are off more than 10 percent.
The theory that airline earnings would get better was based on three premises, which have turned out to be largely untrue. The first is that fuel costs would continue to fall, or at least stabilize. The price of crude has risen to $80 and there are concerns that a step-up in the world's economic growth will take oil even higher, bringing jet fuel costs with it.
The last and most critical factor affecting airline earnings improvement is that many believed that the economic recovery would bring travelers out in droves. However, unemployment and a new frugality on the part of business have made it more difficult for airlines to draw passengers back, and that could be the case for another several quarters -- if the economy continues to recover.
The notion that the business prospect of airlines is getting better is merely a notion.
Douglas A. McIntyre in an editor at 24/7 Wall St.
Why is Oprah going to cable? Hint: It's nothing to get teary about
Kisses from Hershey: Candymaker may court Cadbury with $17 billion bid
D-Day for Harry Reid: Can he wrangle 60 votes for Senate health reform bill?
Reader Comments (Page 1 of 3)
11-06-2009 @ 12:08PM
Chad Snelson said...
British Airways is being especially hit hard by the new frugality in business because British Airways has been focusing on the premium travel (First and Business classes). With more and more business travelers having to settle with Economy (or Business for those who are used to First), airlines, including British Airways, have been taking a major revenue hit.
Reply
11-07-2009 @ 12:10AM
scottg said...
The airlines just do not get it ! even if you have unlimited expense account, who wants to go through the airport hassle, parking fees, TSA snafu, departure delays, air traffic control problems, dirty airplanes, tiny seats, up charges to use the restroom and extra charge for your purse. The industry has done nothing to win passengers back. American was on the right track for awhile by putting more leg room on their flights but dropped it. Get rid of the airlines and join the rest of the world with ultra high speed trains criscrossing the US.
Reply
11-06-2009 @ 11:18PM
Ron said...
Trains are fine, but you cannot get from New York City to London by train.
11-06-2009 @ 11:27PM
Marshall said...
Have you ever tried building a train tunnel under the
Pacific Ocean? If so, how long would it take to go by high
speed train from San Francisco to Tokyo then??
11-07-2009 @ 10:23AM
Brad said...
Airlines have no one but themselves to blame for their troubles. They've treated their employees badly, their customers worse and many people choose not to travel by air. I am glad that I rarely have to fly and I choose to drive wherever I go since time isn't pressing for me. I enjoy my travel much more and NO ONE gives me the hassles airlines passengers have.
Reply
11-06-2009 @ 8:56PM
Christina Kontz said...
Umm . . . just how does our President have anything to do with BRITISH AIRWAYS cutting jobs? And 2) how would one take a high-speed train across the ocean? Just curious.
Reply
11-06-2009 @ 10:23PM
Carlos de Vasconcellos said...
Well, Christina, that's how mental illness works. The subject is British Airways but the sick mind is focussed on Obama and it tries to find ways to fit the subject discussed to the arena of the obsession. This illness is treatable but obsessions are seldom curable.
11-07-2009 @ 9:33AM
dr. sausage said...
maybe the 'virgin' fellow can help, otherwise, i'm sure H.R.H. will come up with something.
Reply
11-06-2009 @ 9:07PM
CHARLES said...
wHO WOULD YOU LIKE TO RUN THE COUNTRY AND RUIN, PRESIDENT Obama is the best yet and I think the American Indian should get a shot at it also, they were robed and put in a corner and now is comming back strong, if you want to hate, hate those thats been stealing all of the money before at least you see where the President is spending it, and not taking it like your brothers were.
Reply
11-06-2009 @ 9:07PM
Charles said...
My friend the air ways hurt themsleves not President Obama, they are theives like the others they only lose what they project a year in advance, and they raise prices and the public is not going for it, big business was spending your money when they over charge and we pay, now it stoped , good for our great President. I never met him but you can believe he got my for and will get it again
Reply
11-06-2009 @ 9:06PM
Donna said...
Hmmmmm, Christina beat me to it......LMAO....but that was my first thought.................how do you take a TRAIN across the ocean..............??????? Cross the USA........yeah I can see that..........but across the ocean.............I am real curious too, to see if someone has an answer to that one.......=)
Reply
11-06-2009 @ 9:13PM
jackisbackprt4 said...
Please don't blame it on Obama.
Reply
11-06-2009 @ 9:11PM
dirtbag said...
We've traveled the world but the last few years the airline industry and the government security situation has completely stopped us. The crap you have to go through to get on a dirty filthy airline, all the extra charges, the mystery food you have to pay for that floats in grease, and the stewards/stewardess are nasty and hostile.... who the hell is stupid enough to pay for this torture to sit for 5 or 6 hours on a runway before you take off then put up with the above mentioned situations. It took us about a second to figure out no more of this crap....we'be bought 3 new suv's this last few years, traveled inside our good old USA and to hell with the remainder of the world, they hate us anyway, treat you like dirt (France is Number one for that award) so I don't feel one dam bit sorry for the airlines, just the good people who tried to make it work, but there were two few of them..
Air travel at this time is a cattle call......figure it out CEO's cut your salary, give good service and people will find you
out.
Reply
11-07-2009 @ 1:10AM
Rueh said...
Come on dirtbag...'mystery food that floats in grease' --which world did you travel? If anything, airline food is always 'grease free'.
11-06-2009 @ 9:49PM
dirkbedarff said...
Airlines are no different than other service industries. Good service will bring loyalty; bad service won't. Price works to a point in attracting those that seek the lowest cost providers, but those that travel frequently will stay pay a little more (not a lot) to fly with those that provide better service. U.S. airlines are among the worst (especially on the domestic front), although I've seen a lot of improvement recently at United and Delta. Delta's international service is still third rate, which is why Emirates, Singapore, Qantas, ANZ, Lufthansa and Air France will continue to get those that fly often on international routes. BA has developed a somewhat less than stellar reputation for it's quality, so it's no surprise there.
Reply
11-06-2009 @ 9:53PM
JOHNNIE said...
This isn't the biggest problem, but I was on a Full Sized Alaskan Airlines jet. There were 4 passengers. That was it. I parked my ass right in First Class. I went up to the galley for something and there was full 3 course meals for every seat in first. I hope economy didn't have 120 sandwiches, bags of chips and cookies. Just a waste.,
Reply
11-06-2009 @ 11:38PM
Marshall said...
I would like to see flight attendants disguised as polar bears.
This is because the airlines need to put a definite deterrent
on rude and rowdy passengers who might possibly
interfere with the operations of a flight. Can you imagine,
seeing a flight attendant kick butt someday,while wearing
a polar bear costume,with a shirt,vest and neck tie and
a pair of black slacks?? How about asking the snack bear
for a beer and a snack next time we fly on Alaska Airlines?
11-06-2009 @ 9:59PM
jhmntz said...
i agree with the fact that these airlines keep taking from the customers. For instance, I know Northwest Airlines started charging for luggage. This was to help offset the fuel costs. The fuel went way down, but did they take the charges away? No, now everyone except Southwest is charging. Most airlines only want the "upper" class, business people anyway, which is why we get treated like garbage. thank you
Reply
11-06-2009 @ 10:03PM
jrbailey225 said...
pr said...
I bet you wrote your piece while wearing your white hood and sheet. You are the reason our country will never reach it greatness.
Reply
11-06-2009 @ 10:11PM
rocketeer said...
I FLEW BA ONCE AND FOUND THEY HAD THE SHORTEST SEAT PITCH (DISTANCE FROM ONE SEAT TO THE ONE IN FRONT OF YOU) OF ALL I'VE FLOWN. NEVER FLOWN BA SINCE. AMERICAN AIRLINES ONCE ADVERTISED LONGER SEAT PITCH, BUT FOUND OUT IT WAS ONLY DOMESTIC FLIGHTS. YUK!
Reply