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.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss