BA investors shrug off £50m hit from the cold
Shares in British Airways were the biggest risers on the FTSE 100 in percentage terms yesterday despite the airline's warning that the bitter cold in December would cost it £50m.
The extreme weather conditions that affected Britain and other parts of Europe last month grounded flights and closed airports including Heathrow and Gatwick, causing travel chaos and misery for thousands of passengers. Total traffic fell by 8.3 per cent in December, largely because of the cold weather, which resulted in a 12 per cent drop in capacity.
However, the airline said that "underlying conditions remain positive". BA also said that the overall decline in passenger numbers for the more profitable premium sector was just 1.6 per cent, compared with a 9.6 per cent decrease in non-premium traffic. Business travel has been growing again as a result of the economic recovery. And compared with the damage caused by last January's cold snap, this month's statistics should look good.
Although the figures for December bring to an end three successive months in which passenger numbers have risen, the figures for premium passengers will please investors, as will BA's comments on the outlook. But they are still disappointing compared with those for some of BA's rivals. For example, Ryanair, the low-cost carrier run by Michael O'Leary, reported a 2 per cent rise in traffic compared with the previous December.
Airlines have nonetheless had a difficult year, as the benefits from the economic recovery have been offset by a series of setbacks. Among these was the grounding of flights in April prompted by the volcanic eruption in Iceland. BA's bitter dispute with its cabin crew also continued to disrupt its business, particularly during the strikes in March and May.
But in a recent note Barclays Capital said it believed an earnings recovery by airlines would continue throughout 2011. It also highlighted BA as one of its sector picks.
"In an attractive sector, we continue to favour long haul over short haul and networks over low-costs. Our top picks remain Air France and British Airways." The shares finished up 12.6p at 300.2p.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...