356 days later

22 May 2009 By Fiona Maharg-Bravo

The UK airline has axed its dividend following results that are as gloomy as they come. BA is burning cash. Its response cutting capacity, capex and costs will need to be brutal if it is to work. In the meantime, the hopedfor deal with Iberia looks further away than ever.

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British Airways reported a £220m operating loss in the year ending March 2009, against a record profit of £875m a year earlier.

The UK airline scrapped its dividend, only a year after reinstating the payout, and said it would cut capacity by 4% during the coming winter.

It declined to give revenue guidance, citing tough market conditions.

Willie Walsh, the chief executive, said it was the harshest environment the airline had ever faced.

Costs, excluding fuel and exchange rates, were flat. Fuel costs increased 45% to £3bn. Net debt was £2.4bn, up £1.1bn over the year, including £554m due to retranslation of foreign debt and £122m due to the reclassification of 10 aircraft from operating to finance leases.

BA's talks with employees are possible pay cuts are ongoing.

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