Record losses for BA as fresh strikes loom

British Airways today reported record losses of £531 million as it finalised contingency plans to deal with the first of a wave of fresh strikes in its bitter dispute with cabin crew.

The airline has been battered by the recession, a harsh winter and seven days of strikes in March, although its slide into the red was slightly less than the £600 million feared.

BA's total losses for the past two years soared to £932 million after a £401 million reverse the previous year, although it said market conditions were showing improvement and was expecting to break even this year following the heavy losses.

The airline reported that revenues plunged by £1 billion, although this was offset by falling fuel costs as well as savings elsewhere in the business.

Chief executive Willie Walsh accused the cabin crew union Unite of being "out of touch with reality" as hopes of finding a last-minute deal faded.

Unite countered that there was an atmosphere of "intimidation and fear" at the company as a result of the long-running row over cost-cutting.

Mr Walsh pledged to run an increased level of services during 15 days of strikes, starting with a five-day walkout from Monday, with the help of an increasing number of volunteer staff who have come forward to stand in for those taking industrial action.

He said BA's customers were "frustrated" at the disruption caused by the strikes, but maintained they were staying loyal to the airline.

"There is a surprisingly strong level of support from customers. The vast majority of letters I receive are expressing anger at Unite and are committed to supporting BA. Customers need confidence in our schedule and they know that when we say we will keep the flag flying, we can deliver on that.

"Returning the business to profitability requires permanent change across the company and it's disappointing that our cabin crew union fails to recognise that," he warned.

He added that the current financial year "could hardly have had a worse start" due to the disruption caused by Iceland's volcanic eruption, which closed most of European airspace for almost a week in April.

Derek Simpson, joint leader of Unite, told the BBC that Mr Walsh was "misleading" people, adding: "By BA's own assessment, we came very close to their target figure for costs down, but BA chose to reject this. BA crew are saying that they know what the problem is, we're willing to make serious cuts, but BA has chosen to ignore them.

"Sadly, there is no trust now between the parties. There is an agreement on the table. It is not particularly brilliant but it could be workable - although it needs selling and crew need persuading to accept it. We would try to do that but it is very difficult when an atmosphere of intimidation and fear persists. The intimidation leaves a very bad atmosphere all round.

"As we've put to Willie Walsh directly, isn't it silly to continue with this vindictiveness when there is a real prospect of getting people back to work again and everything that BA wants - costs down, new fleet, new ways of working. But all this is being held up because of this macho position by BA."

Mr Walsh said passengers' anger was being directed at Unite, which he described as "dysfunctional and out of touch with reality" because of the activities of its cabin crew branch Bassa.

"The vast majority of people at British Airways do not support the action being taken by cabin crew. They have voted with their feet. During the last strike, 73% of cabin crew turned up for work as normal.

"We cannot allow this business to be dragged down by a minority of people," he told BBC Radio 4's Today programme.

He revealed that he had spoken last night to Unite's joint leader Tony Woodley, but complained that agreements reached between the two leaders had not been accepted by Bassa.

"We will talk to one another over the weekend and I hope that common sense will prevail, but we cannot afford to let a rogue branch continue to drag us down."

It is possible that Mr Walsh will speak over the weekend with Unite's national leaders, but neither side was predicting a breakthrough.

The union will mount picket lines at Heathrow Airport from Monday morning and will again use a nearby soccer ground as a meeting point for strikers.

BA, which said the first wave of strikes cost it £43 million, could face a £100 million bill from the next action.

The airline said it planned to fly more than 60,000 customers a day next week, operating 60% of long-haul flights and 50% of short-haul services from Heathrow.

BA is leasing up to eight aircraft with pilots and crew from other UK or European airlines and has secured thousands of seats on more than 30 other airlines for its passengers.