U.S. News

British Airways Third-Quarter Operating Profit Slumps


British Airways reported a fiscal third-quarter operating profit drop of 4.2% Friday and CEO Willie Walsh blamed higher fuel costs.

The company’s revenues grew slightly, up 6.5% for the three-month period ended December, compared to a year ago.

Fiscal third-quarter operating profit was 129 million pounds ($253 million), down from 176 million ($345 million) from the 2005 period.

"These are mixed results with costs up 3% reflecting higher fuel costs and revenue up 0.5%," Walsh said in a statement. "Fuel remains a significant burden with costs in the quarter up 11.2%."

BA Operating Profit Slumps

BA’s financial worries look set to continue as January’s averted, yet disruptive, cabin crew strike will cost the carrier £80 million ($157 million). Other external factors include tighter security measures and cancellations due to bad weather.  

The results are worse than expected and “what it’s telling us is that we’ve got one more bad quarter to come,” Howard Wheeldon, a strategist at BGC Partners, told “Squawk Box Europe.”   

Hopefully by April, union, security and baggage problems will be behind the airline, Wheeldon said.

Things should start to improve if revenues stay up, he added. But a load factor of 74% is “too low for an airline of this calibre, which is actually increasing its capacity,” Wheeldon said.