BA takes £250m hit from ash and strikes

Despite improving performance, British Airways was dragged down to a £164m pre-tax loss in the first quarter by the £250m cost of cabin crew strikes and the volcanic ash cloud, the carrier said yesterday.

Revenues were down by 2.3 per cent to £1.94bn, but costs came down by 3.3 per cent and global economic recovery produced strong growth in long haul premium passenger numbers and the group's cargo business. "The underlying figures are positive and the market has been pleasantly surprised by both revenue and cost performances," BA's chief executive, Willie Walsh, said.

The six-day airspace closure over volcano ash in April cost the group £108m. Industrial action made an even bigger dent in the figures, costing a total of £142m. After a relatively low turn-out at trade union Unite's recent ballot on BA's "final offer", Mr Walsh is set to meet with Unite's Tony Woodley at a meeting convened by arbiter Acas next week.

After last year's record £531m loss, BA is on track to break even this year. But the improving climate does not shake the case for restructuring, according to Mr Walsh. "The projection is still only that we will break even," he said. "You can't run a business that is just breaking even."