British Airways Profit Warning As Pilot Strike Takes Its Toll

British Airways

International Airlines Group, owner of British Airways, has revealed the cost of a 48-hour walkout

British Airways took a 137 million euro (£121.5 million) hit from the 48-hour strike by pilots that saw 4,521 flights cancelled earlier this month.

The widespread disruption means International Airlines Group (IAG) operating profits, before one-off items, will be 215 million euro (£195 million) lower than in 2018, bosses said.

IAG also revealed it took a further 33 million euro (£29 million) hit from the threatened strikes at Heathrow Airport, and growth is set to be slower than expected this year and next.

British Airways strikes
Terminal Five at Heathrow Airport on day one of the first strike by British Airways pilots (PA)

Updating analysts following the unplanned profit warning, IAG chief executive Willie Walsh also said he believes the airline will benefit from further collapses of smaller rivals, and is looking at snapping up some of the empty Gatwick slots left by bust Thomas Cook.

On the potential for future strikes, he said there have been no further formal talks between BA and pilot union representatives.

Mr Walsh said: “Clearly bookings have been disrupted by the industrial action, but when we dig into it we’re not seeing any underlying issue.

“The airline’s offer of a 11.5% pay increase over three years still stands and has been accepted by British Airways’ other unions, representing 90% of the airline’s employees.

“Clearly any further industrial action will additionally impact IAG’s full-year 2019 operating profit.”

The strikes over September 9 and 10, and another on September 27 which was subsequently called off, led to 4,521 flights cancelled, although 2,196 were subsequently reinstated.

Willie Walsh
Willie Walsh, IAG chief executive, remained bullish for the future (Nick Morrish/British Airways/IAG)

The British Airline Pilots’ Association (Balpa) suspended the second strike but has said further strikes could be down the line.

Mr Walsh appeared unfazed by Thursday’s profit warning, telling the City that there are plenty of pilots looking for work.

Speaking on a conference call with analysts, he said: “We’re viewing the planned recruitment for pilots, but… there is no shortage of pilot availability and we see that with all airlines when we look for recruiting pilots.”

But he admitted growth for the rest of this year and next will be lower than forecast, even with collapsing airlines increasing IAG’s passenger numbers.

Mr Walsh said: “What we see is very encouraging and a number of airlines – weaker ones – are disappearing. We still expect 2020 to be a growth year for us, but the level of growth will be lower than previously guided.”

Growth for 2019 is expected to be 4% versus previous guidance of 5%.

On buying Thomas Cook slots at Gatwick Airport, Mr Walsh said: “If there’s slots available we’ll be looking at slots, but through the normal way, through the slot pool.

“But if there is an opportunity to acquire some slots through the administration… We clearly see Gatwick as an opportunity for us and that is something we will be looking at.”

Shares fell on opening, down 16.1p at 464p.

PM Today Team
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