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BA: Job cuts help restore profit
LONDON, England (CNN) -- British Airways said on Tuesday cutting jobs and other costs would help it return to profit this year. Europe's biggest airline also announced that profit soared in the three months to September 30. Net income rose to £152 million ($240 million), or 13.7 pence a share, from £19 million, or 1.8 pence, a year ago. But sales fell 2.1 percent to £2.1 billion as a global economic slowdown and last year's terror attacks on the United States discouraged travellers from flying. BA began cutting jobs before the September 11 attacks and cut further as demand dropped by a third.
In all, BA (BAY) expects to cut more than 13,000 jobs as it reduces the number of seats it flies and has slashes airfares on 176 routes to take on low-cost operators. Ryanair, Europe's second-largest budget airline, said profit soared to a record as it carried more passengers, flew to more destinations and cut costs. (Full story) "While the global market continues to be subject to global economic and political uncertainty the revenue outlook has stabilised," BA said in a statement. It said its cost-cutting measures, including reorganising its European operations, were on track and delivering "the cost savings that, in the absence of war on terrorist action, are expected to return our business to profitability for the full year." But the company's stock -- which rose more than 70 percent since hitting a low of 83 pence in October -- dived 9.3 percent, or 14 pence, to 144.5 pence in midday London trading on Tuesday amid concerns about sales and debt levels. "It's a result that is ahead of expectations but it is not a fantastic result,'' Morgan Stanley analyst Martin Borghetto told Reuters. "There are still pressures visible in the result, especially on the yield side which was not as good as expected.'' BA, which relies heavily on the depressed transatlantic markets for its profits, posted an operating profit of £248 million ($386 million), which beat analysts' expectations and was up from £72 million last year.
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