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Catering row costs BA up to £45m
The dispute at British Airways’ in-flight caterers Gate Gourmet cost the airline up to £45 million.
The figure emerged today as the carrier reported a fall in third quarter pre-tax profits to £241 million against £293 million in the same period a year ago.
BA’s new chief executive Willie Walsh warned of further cuts as the carrier revealed that the cost of the Gate Gourmet dispute in August and the associated unlawful industrial action was estimated at between £35-£45 million.
While describing the quarterly results as “reasonable”, Walsh said: “It is clear, however, that we need to re-energise our drive on controllable costs. We have demonstrated time and again that it is possible to offer world class service while improving unit cost controls.”
He added that costs were up in most areas, with fuel being the single biggest contributor, up a “staggering” 51.3% in the period to the end of September.
Walsh added: “We must ensure a successful move to Heathrow Terminal 5 in 2008 and redouble our efforts to make British Airways more focused and better able to serve all of our customers.”
Chairman Martin Broughton added that “significant promotional activity” was required to maintain seat factors due to “broadly unchanged” market conditions.
He said: “Fuel costs continue to be a challenge for the industry, but our guidance is unchanged with total fuel costs expected to be up by £525 million this year.”
Meanwhile, the airline saw October traffic outstrip capacity, producing a 0.5 point rise in passenger load factor to 74.7%, with premium traffic up 6.8% and 6.3% elsewhere.
BA said that continued capacity restraint by the industry is resulting in a more stable price environment.
“This coupled with good demand for premium traffic – in particular the growth in leisure premium – has delivered a small yield improvement,” a statement said. The airline projected improved revenue growth for the remainder of the financial year.
Report by Phil Davies
Phil Davies
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