p14 City May 29 27/5/09 21:38 Page 14
City & finance
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Emirates Group
BA ‘to slash fares’
profits fall 72%
after losing £401m
THE EMIRATES Group has reported a 72% fall in
profit for its financial year ending March 31.
The group’s net profit was $406m, down from
Chris Gray and.
Losing height: BA results
£1.4bn as it used up £483m
Martin Ferguson.
$1.45bn the previous year. to keep running.
The Dubai-based business, which owns BRITISH Airways is set to Pre-tax 2008-09 £401m LOSS Clive Green, of London-
Emirates Airline, said the losses were down to slash fares further to shore
Pre-tax 2007-08 £922m PROFIT
based agency Clive Green
Operating 2008-09 £220m LOSS
high fuel prices in the first six months of the year up demand after unveiling
Operating 2007-08 £878m PROFIT
Travel, said BA was
and the impact of the global recession. its worst-ever full year
Fuel bill 2008-09 £3bn
“haemorrhaging cash” and
Company bosses said the results were “satis- results. the scale of discounting
factory” when taking into account the present The airline has already by BA and other the major
economic climate. released unprecedented airlines was so large that
Sheikh Ahmed bin Saeed Al-Maktoum, chair- discounts, such as two-for their published fares were
man and chief executive, said: “We have returned one offers, and analysts generally cheaper than
our 21st consecutive year of net profit, and al- believe more will follow fares contracted in agency
though it is a 72% decrease on the previous after it posted a £401m pre-tax loss for the year sales agreements.
year’s all-time record profit, under the circum- to the end of March. That compared with a Peter Morris, chief economist at aviation
stances this is a satisfactory result.” £922m profit the previous year. specialist Ascend Worldwide, said BA was paying
Emirates’ cash balance decreased to $2.4bn, Chief executive Willie Walsh warned the airline the price for being a “one-trick pony” that did
down from $3.8bn the previous year. was facing its harshest trading environment, well in good times but did not have a sufficiently
Sheikh Ahmed predicted another year of with “no immediate improvement visible”. diverse business model to cope in a downturn.
“satisfactory growth” although he admitted However, he said the airline was gaining mar-
demand for premium cabins remained weak. ket share and would continue to chase volume ■ Transatlantic fares ‘blood-bath’, p25
as customers became more price-sensitive.
Douglas McNeill, aviation analyst at Blue Oar
Securities, said fare cuts were almost certain. New flights to Caribbean: British Airways
“They [BA] are indicating a willingness to is expanding its Caribbean leisure
be more competitive on price in order to drive programme further with new twice-weekly
volume,” he said. services from Gatwick to Montego Bay and
BA is aiming to cut costs by making more staff Punta Cana in the Dominican Republic.
redundant on top of the 2,500 job losses already The new flights will launch from October
announced, as well as grounding up to 16 25. BA is also increasing the number of
Cost cuts tip W&O
aircraft, cutting winter capacity by 4% and flights from Gatwick to St Lucia, Barbados
paying no dividend this year. and Port of Spain, Trinidad.
into £100k profit
Its cash reserves fell by a quarter this year to
WESTERN & ORIENTAL has turned a half-yearly
Air France-KLM
in the last few weeks but it was far from clear if
pre-tax loss of £2m last year into a £100,000 the economy was starting to recover.
profit, helped by making £2.3m of administrative
posts ¤129m loss
Summer capacity will be cut by 4.5%, and its
savings. cost savings target has been raised to ¤600m,
The savings helped offset a fall in revenue meaning about 3,000 more job losses on top of
from £29.2m to £28.4m. AIR France-KLM is cutting summer capacity by 2,700 already announced.
Forward sales booked by March 31 were down 4.5% after reporting a loss of ¤129m for the year The losses were better than expected as the
26.4% on the previous year at £18.9m, which the to the end of March. airline had warned it expected to lose ¤200m
group said was due to later booking patterns. The airline group admitted the economic crisis because of the fuel price rise and the collapse in
Chairman David Howell said revenue was in worsened in the first three months of this year business and cargo traffic.
line with expectations but costs were lower than and said a 2.7% capacity cut had not been It is not paying a dividend this year as it said
expected and further savings would come in the enough to compensate for a 5.8% fall in demand. its priority was to preserve cash. The company
second half of the year. It said there were “some signs of stabilisation” has already said it expects another loss next year.
14 29.05.2009
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