Loss leads British Airways to freeze pay

Marketplace Staff Feb 6, 2009


British Airways announced this morning a major loss in the final three quarters of last year — and, as a result, that it is freezing pay for its staff of over 40,000 workers. Analysts say this could portend more troubles for other large European airlines. From Paris, Erik Campano reports

Erik Campano: British Airways this morning blamed rising fuel costs, and the declining value of the pound, for its pre-tax loss of about a hundred million dollars.

But an industry analyst, Nick Van Den Brul of the French BNP Paribas, says there may have been another reason:

Nick Van Den Brul: A sharp drop in premium, so there’s a lot of trading down from the premium cabin to the economy cabin.

Since first and business class is more popular on long flights, he says, big national carriers like Lufthansa and Air France, which fly all around the world, are also being hurt. Virgin Atlantic already freezed its pay last month. And Van Den Brul says that’s probably not the last cost-cutting to expect among Europe’s major airlines.

Van Den Brul: We’re likely to see the sort of restructuring measures that we saw after 9/11.

British Airways says, it’s opened discussions with unions about the freeze, and it says, it can’t imagine lifting as long as this economic climate continues.

In Paris, I’m Erik Campano for Marketplace.

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