BA posts worst loss since float

A second loss for BA since privatistion 15 years ago

LONDON, England (CNN) -- British Airways, Europe's biggest airline, has posted its worst full-year loss since privatisation 15-years ago, and warned the market remains "soft".

The company said on Monday it made a net loss of £142 million for the year ending March 31, compared with a profit of £67 million a year ago. At the pretax level, the loss came in at £200 million.

Analysts polled by Reuters had forecast a pretax loss of £306 million ($446 million), with estimates in the range of £218 million to £400 million.

BA (BAY), like its rival Lufthansa (LHA) and Air France (PAI), has grounded flights to meet a decline in demand since September 11.

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According to data complied by the Association of European Airlines, traffic on the North Atlantic route was down more than 22 percent between September 10 and May 5. Total international traffic is down more than 12 percent over the same period.

But BA was in trouble before the terror attacks as a global economic slowdown and low-cost operators hit earnings.

The airline, which has cut more than 13,000 jobs and is overhauling its European operations to take on the low-cost operators, said it would continue to reign in costs to return to profitability.

"The market is expected to remain soft but the swift and decisive actions we have taken show we are determined to return the business to acceptable levels of profitability," said Chief Executive Rod Eddington.

BA's stock, which has fallen more than a third over the last year, rose 4.5 percent to 246.6 pence in early London trading on Monday. Its shares have outperformed the FTSE transport index by 13 percent this year as demand for air travel has slowly begun to recover.

In the fourth-quarter of its financial year, BA made a loss of £43 million.

"If you take a look at the fourth quarter, taking out restructuring charges, the company made an operating profit," Chris Tarry, analyst at Commerzbank, told CNN. "They were some £130 million better than what we were looking for.

"To get there they've taken aircraft out of the fleet and they have been helped by lower fuel costs.

"It's important that BA gets its cost right. It is operating in a tough environment and we estimate that the global airlines industry will lose between $10 billion and $11 billion."

Monday's loss was the second since the airline was floated by the UK government in 1989. The company posted a net loss of £21 million for its financial year ending March 31, 2000.