BA still faces financial hit despite escaping 12-day Christmas strike

By Transport Editor


Published: 9:38PM GMT 17 Dec 2009





British Airways

BA
on Thursday won a court ruling forcing union Unite to hold another
ballot before deciding whether to press ahead with a strike – a move that
prevents any industrial action before the end of January.

Airline sources also stressed that the two sides are due in court on February
1 to settle a dispute over whether BA’s implementation of new working
practices constitutes a change to crew contracts – meaning the union may
wait for the outcome before reconsidering any strike.

However, analysts said the uncertainty surrounding the airline’s industrial
relations would continue to hit bookings.

Mark McVicar, an analyst at Nomura, said: “The point is there is no
resolution yet. There is a financial consequence to what has happened even
though we are not going to see a 12-day strike.” BA shares fell 4.8 to
192.2p.

Mr McVicar pointed that, while Christmas bookings affected 1m leisure
travellers, January was “the biggest month for taking bookings from
business travellers” – the mainstay of BA’s business.

He said BA, which lost £401m pre-tax last year and is forecast to lose £600m
this year, would struggle to win business from corporate clients while the
threat of industrial action remained – especially given the competition from
Virgin Atlantic and rival European and US carriers.

Bob Atkinson, from travelsupermarket.com, said: “Although the airline is
highly likely to try to attract customers with low-priced flights in the
coming weeks, the level of uncertainty around possible future strikes will
see customers deserting the airline in droves, as they book with rival
carriers offering equally great levels of service at competitive prices.”

Earlier this week, Jarrod Castle, an analyst at BA house broker UBS had
forecast that a 12-day strike could cost BA £40m-£50m in lost profits and
£250m-£275m in lost revenues.

BA held out the prospect that, after talks with the unions, it may yet avoid
any strike, saying: “In recent days, we believe Unite has formed a
better understanding of our position and of the ways in which we could move
forward.”

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