BA bleeds: Aftermath of bomb scare

The bid to blow up U.S. bound airliners leaving Britain may have been foiled, but British Airways is still reeling under its aftermath. The stricter security measures, cancelled flights and lower passenger traffic thereafter, has made a 100 million pound dent in British Airways' profits.

BA's passenger traffic took a huge hit in September and October following restrictions on hand luggage which dissuaded passengers from flying. The loss of 100 million pound is well above BA's original estimate of 40 million pounds. However it is in line with analysts' expectations.

Things are in a state of normalcy in London but the Chief Executive Officer of Europe's third-largest airline, BA, Willie Walsh admits, "Premium traffic continues to be affected by the tighter security arrangements currently in place. Transfers at Heathrow are more difficult".

The company’s results this quarter were not only hit by the security-related disruption in August, but also by higher fuel prices. Rivals such as Air France-KLM Group and Deutsche Lufthansa AG, British Airways faced record-high oil prices for most of the year. However, the recent drop in crude oil has helped profits.

BA claimed that its operating profit for the three months ending August was 134 million pound, compared to 261 million pound in 2005.

The airline claimed that its full-year revenue was expected to rise by 4.5–5 percent, down 50 basis points from its previous estimate.

Moreover, the company expects its fuel bill to be 400 million pounds higher this year, an improvement of 50 million pound from 450 million pound rise forecast previously.

The results include a 106 million pound write-down from the sale of the short-haul service. If the same is excluded, the results reveal a marginal 8 per cent profit drop for the firm.

Meanwhile, the airline has reached agreement in principle with Flybe for the sale of low-cost subsidiary BA Connect to the latter, for an undisclosed amount.