British Airways prepares for loss of $1 billion

LONDON - British Airways is set to plunge to a record loss this year in the wake of the terrorist attacks on America, according to the first authoritative assessment of the airline's prospects.

The gloomy prediction came as BA's troubled rival, Swissair, obtained rescue financing after a weekend of talks with the Government and creditors aimed at staving off bankruptcy at Europe's fourth largest airline.

Chris Tarry, aviation analyst with Commerzbank, is forecasting that BA will make a pre-tax loss for the year of £326m ($1.18 billion), and estimates that the collapse in traffic on transatlantic routes will help wipe up to £1bn off BA's revenues in 2001-2002. For the following year he forecasts a loss of £70m.

The forecast loss would be the worst in the airline's history and the first since privatisation in 1986.

Last week BA disclosed that it had lost £48m in revenues in the first week after the attacks of New York and Washington as transatlantic travel fell by 60 per cent. The market is now awaiting BA's traffic figures for the whole of September, due out in the next week, to assess the full impact of the US atrocities on its prospects. Forward bookings across the Atlantic are reported to be down 30-35 per cent. This compares with a 24 per cent decline in transatlantic traffic in January 1991 when the Gulf War began.

BA has responded to the crisis by axing 7,000 jobs, grounding 20 aircraft and reducing capacity by 10 per cent – with the result that it will now operate 190 fewer services a week. But analysts believe it may need to make further cutbacks depending on how serious and extensive President Bush's war on terrorism proves.

- INDEPENDENT