BA rocked by U.S. attacks

October 3, 2001 Posted: 1424 GMT

LONDON (CNN) -- British Airways has revealed it lost 48 million pounds in the week following the terrorist attacks in the U.S. as its traffic to America plunged 60 percent.

Europe's biggest airline said it also faced a significant hike in costs for insurance and security on top of the $71 million losses in revenue in the week after September 11.

Airlines around the world were already struggling with a decline in business because of the global economic downturn before the financial shockwave from the attacks struck, leading to huge numbers of passengers shunning air travel.

BA, which gleans about a third of its revenue from transatlantic flights, said two weeks ago that it was slashing 5,200 jobs, on top of 1,800 cuts it had previously announced, and grounding 20 aircraft to help it cope with the financial impact of the disaster.

BA said its traffic fell 22 percent in September compared to the same month in 2000.

It had been down as much as 36 percent in the week following the U.S. attacks, but recovered some ground to reach a 28 percent decline in the last week of the month.

Premium traffic -- first and business class traffic -- was the hardest hit, dropping by a third on last year, while non-premium traffic was down 20 percent.

U.S. attacks hit BA strategy

The figures are a blow to BA, which had launched a strategy before the World Trade Center tragedy to switch to smaller jets with fewer economy-class seats and more high-paying business travelers in a bid to boost profits.

The company had seen its operating profit fall by half to £50 million ($71.5 million) in the three months to June 30 from £97 million for the same period in 2000 as business customers cut back on travel.

British Airways Chief Executive Rod Eddington has said he is taking a £40,000 ($58,000) cut in salary as the airline industry struggles to survive.

BA executives are also getting a 15 percent reduction in pay and 600 other managers have accepted a 10 percent cut.

But British Airways said it was in a sound position, in spite of the immediate revenue pressures, saying it had responded quickly with a series of measures to reduce the scale of its business.

Shares in British Airways (BAY) were up 2.7 percent on London's FTSE 100 index following its announcement.

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