BAWC revenue down as Virgin and BA kick shins

BRITISH Airways World Cargo’s (BAWC) revenue fell 28.1 per cent in the first financial quarter compared to last year. Total revenue was £128 million (US$221 million). Cargo tonne kilometres (CTK) were down 11.5 per cent to 1.095 billion with capacity down 6.5 per cent and commercial yield (commercial revenue per CTK) down 19 per cent from 2008.

Steve Gunning, managing director, BA World Cargo said: “The accelerated decline in cargo volumes first experienced in late 2008 continued in the first quarter of the new financial year, but more recently we have seen a stabilisation in demand and some signs of recovery. In addition, the imbalance between air freight demand and supply is reducing which can only be beneficial to the industry as a whole.”

Sean Doyle, financial controller, BA World Cargo, added: “Demand for general airfreight in the first quarter of the year has declined across all markets, though our premium volumes have performed relatively well given the economic conditions.  Europe, the US and Asia Pacific have been hit particularly hard with yields falling as a result of declining fuel surcharges and over-capacity in the market.”

Meanwhile, BAWC’s parent company, British Airways (BA), made an operating loss of £94 million ($155 million) compared to a profit of £35 million ($57 million) last year. Revenues fell 12.2 per cent to £1.983 billion ($3.271 billion). Cargo revenue was down 28 per cent.

BA’s chief financial officer, Keith Williams, said there has been, “significant decline in [cargo] volumes and yields. We appear to have reached the bottom, but any recovery in cargo is likely to be slow”.

“Trading conditions continue to be very challenging,” said Willie Walsh, BA’s chief executive officer, said. “While traffic volumes are down considerably compared to last year, they have stabilised during the quarter and show some signs of improvement for the peak summer months,” he added.

Elsewhere, BA’s and Virgin’s long-term animosity continued following Virgin Atlantic’s criticism of BA trying to merge with American Airlines (AA). Descending into a tit-for tat, schoolyard scuffle, BA then retaliated by saying that Virgin had double standards; it having applied for anti-trust immunity with Delta on routes between Australia and the US. Virgin came back and pointed out that BA’s market dominance far outweighs V Australia, which is just six months old and has three aircraft in its fleet compared with BA’s more than 200.

Squaring up, Steve Ridgway, chief executive of Virgin Atlantic, said: “There is simply no comparison between the two. With 80 per cent market share, BA and AA are the two biggest and most dominant airlines between Heathrow and key US cities, whereas V Australia and Delta’s market share on the Pacific routes are much, much smaller.”


For the full story, read Air Cargo News, dated 21 August.

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