BA braced for heavy losses

BA's share price has been disappointingly earthbound

British Airways is expected to announce on Monday a heavy loss for 2001, its first fall into the red since privatisation in 1987.

The airline, hit like its rivals by the slowdown in travel since 11 September, could lose as much as £400m ($583m) for the year, according to analysts' estimates.

But a recent string of encouraging results from industry peers such as Lufthansa, SAS and Swiss have sparked hopes that BA might also send out some positive signals.

The airline's views on trading prospects going forward are likely to argue that the worst is over, analysts say.

Investors will also look for some news on ongoing restructuring, seen as crucial if the carrier's lacklustre share performance is to be revived.

Taking action

Since 11 September, BA has enjoyed marginally better fortunes than its US rivals, with traffic figures remaining more robust than some had feared.

Last year, the airline shifted its focus away from the mass market and towards business travel, which has held up more strongly during the general downturn.

It has also launched a brutal cost-cutting programme, including the loss of some 13,000 jobs.

Its plans include the sale of non-core assets; last week budget airline EasyJet said it had an option to buy BA's loss-making German airline Deutsche BA.

Other disposals, including possibly that of BA's stake in Australia's Qantas, have also been rumoured, but BA is likely to rule out any hasty moves.

Problems, problems

A progress report on cost-cutting may not be enough to reignite BA's shares, however.

The airline's core long-haul business is seen as too heavily exposed to the vulnerable Transatlantic route, and is weak in growth areas such as Europe.

Its shrinking but still extensive short-haul network, meanwhile, is still seen as a heavy burden, and has come under assault from budget carriers such as EasyJet.

And while there are fewer concerns over the quality of BA's management than there were a couple of years, some doubts remain over the firm's ability to squeeze shareholder value out of its operations.

Last year, BA sold budget airline Go to venture capitalists for £110m; last week, Go was bought by EasyJet for three times as much.