British Airways' new boss said today that the airline would not achieve a key profitability goal this year and flagged a £100m sterling investment on in-flight products to win back long-haul customers.
Chief Executive Willie Walsh also said the carrier planned changes to some loss-making short-haul operations and said his priority would be ensuring the airline had a smooth transition to a single terminal at London's Heathrow Airport by 2008.
Walsh said the carrier would not achieve its goal of a 10% operating margin, a target set by his predecessor, this year due to record high fuel costs. 'I do believe it is achievable. With fuel prices where they are we clearly are flying into very significant headwinds. I don't have a date in mind when we will achieve it,' Walsh said in a conference call, adding it would not be this year.
The airline achieved a 8.5% operating margin in the first quarter of the current year.
Walsh, former boss of Aer Lingus, replaced outgoing chief Rod Eddington to head Europe's third-largest airline over the weekend. He said the airline planned to invest £100m on new business-class seats and in-flight entertainment, with an announcement due in the next few months.
Walsh also said there would be changes at the airline's regional short-haul business.
Labour issues will be a top priority for the new BA boss ahead of the airline's move into a single terminal at London's Heathrow Airport in 2008 which is expected to result in thousands of job losses. The airline currently operates from two terminals at Heathrow.
BA is targeting a £300m reduction in labour costs by March 2007. Walsh declined to confirm reports it hoped to reduce the size of its 46,000-strong workforce by 15% under the move.
Despite an industrial dispute at its caterer Gate Gourmet which spilled over into a sympathy strike by BA staff last month, Walsh said there were no plans to cut catering from any BA services.
He also said that consolidation was not an immediate priority until there was regulatory changes in the airline industry, signalling there were no plans to lift its stake in Spain's Iberia. He said American Airlines remained an 'excellent' partner.
Walsh also said there were no immediate plans to buy new aircraft but the carrier was evaluating a range of models, including the Boeing 787, 777 and the proposed 747 Advanced, as well as the Airbus A350 and A380.
