SHARES IN British Airways nosedived yesterday after the airline announced a significant fall in the number of business and first-class passengers carried in the first three months of the year, writes Michael Harrison.
The announcement prompted stockbrokers to slash their profit forecasts for the year just ended, and left BA shares 20p lower at 275p.
BA said that although scheduled traffic had increased by 12.3 per cent in 1992-93, yields for the fourth quarter remained below last year's levels. In particular, the number of passengers carried in business and first class fell 4 per cent between January and March, compared with the same period in 1992.
Warburg Securities cut its profit forecast for the year from pounds 195m to pounds 180m while UBS, the company's broker, was said to have lowered its forecast from pounds 210m to pounds 175m.
Over the weekend BA announced reductions of up to a quarter in Club class fares on eight of its busiest European routes in an attempt to attract more business passengers.
The price reductions, which apply until the end of June, reduce the London-Paris business return fare by pounds 78 to pounds 240. The saving on the Heathrow-Amsterdam return is pounds 56.
BA is estimated to have lost at least pounds 60m on its short-haul European route network from Gatwick in 1992-93. It has also been affected by savage price-cutting on some of its most lucrative transatlantic routes.
Meanwhile, British Midland, which helped prompt the latest round of European fare cuts by introducing a new business class fares structure on its five scheduled routes, said BA's 'knee-jerk mentality' was an insult to passengers. Sir Michael Bishop, chairman, said: 'How many travellers will be persuaded by an airline which cuts its fares by a quarter on routes where it faces competition, yet keeps them at the same high level where it does not?'Reuse content