Big freeze deals a £50m blow to BA

By ROB DAVIES FOR THE DAILY MAIL
Updated: 18:02 EST, 6 January 2011

The failure of British airports to cope with heavy snowfall will deal a blow of more than £50million to British Airways, in a setback to the airline's plan to break even this year.

The flag- carrier said airport closures in December 2010 had forced down monthly traffic numbers by 14.2 per cent in the UK and Europe, a fall of nearly 200,000 passengers.

BA - whose £5billion merger with Spain's Iberia will complete later this month - said global traffic was down nearly 11 per cent, while total capacity fell by 12 per cent and cargo traffic declined by 10 per cent.

Winter blues: The snow may have grounded the flag-carrier's plans to break even this year

The resulting £50million hit will be felt in the firm's third quarter, while BA warned of a 'small additional impact' in January due to cancelled return legs on flights grounded over the festive period.

A spokesman said more than 2,000 flights had been axed during December, which saw chaotic scenes at UK airports such as Heathrow, where some passengers were forced to sleep on the floor.

The hefty bill attached to the snowy weather casts a shadow over British Airways chief executive Willie Walsh's target - issued in July - of breaking even in the current financial year.

The firm has suffered two successive record loss-making years, culminating in its biggest ever foray into the red when it unveiled a £531million loss in 2010.

Pre-tax profits of £158million for the first half of this year could be all but wiped out in the traditionally difficult second half.

However, operating profits have shown strong improvement since last year, while the breakeven target could still be reached if the firm's financial reporting calendar is shifted to take the Iberia merger into account.

Shares in BA - which will begin trading as the new International Airlines Group on January 24 - climbed 12.6p to level out at 300.2p, as stock markets welcomed a modicum of certainty on the dent to the airline's revenues.

No- frills airline Ryanair escaped the pain felt by BA, reporting December traffic of 5million, up 2 per cent on the same month of 2009.

The Irish airline uses Stansted as its main UK hub and benefited from the Essex airport's relative ability to keep running through the difficult weather conditions.

Ryanair also operates many routes between southern European airports, which remained largely unaffected by the snow.

But the airline pointed out that it had lost 1.45million passengers in the year to date due to what it termed the 'unnecessary' closures of EU airspace during the Icelandic volcanic ash saga.