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Sat, May 22, 2010

BA Racks Up Record Losses Of $765 Million

Airline Still Says It Hopes To Break Even This Year

Struggling British Airways' financial woes are showing little sign of easing, as the carrier posted a record pre-tax loss of $765 million over the past 12 months.

"This is our second consecutive year of record losses but we take heart from the fact that, while our revenue has fallen by one billion pounds, so have our costs," BA Chairman Martin Broughton said in a statement Friday. Broughton said that, while revenue has fallen by $1.4 billion, the airline has managed to reduce costs as well, and that he expects that it would break even this year.

The international news service AFP reports that the airline had been expected to lose $867 million this year, so the carrier was performing better than had been anticipated. It has been slashing costs, and has recently announced a merger with Spanish airline Iberia in an effort to stem the red ink. The merger is expected to be finalized later this year.

The airline has also cut about 9.4 percent of its total workforce, or 3,800 jobs during the current fiscal year, and some 6,000 positions overall.

The airline is facing labor actions on the part of cabin crews next week, which could add to its difficulties. British courts upheld the Unite, The Union's right to stage a labor action Thursday.

Like most airlines operating in Europe, BA was hurt by flight cancellations due to the ash cloud caused by the eruption of Iceland's Eyjafjoell volcano. However, the European Commission agreed that national governments can compensate airlines for losses incurred by that event.

FMI: www.ba.com

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