British Airways is set to post a record loss for its fourth quarter as it continues to battle falling demand and weak sterling, but its shares rose as analysts said the carrier should survive the economic downturn.
The airline said today it had made an operating profit of £89m sterling for the first nine months of the year, sharply down from £744m a year ago.
The airline had warned in a profit warning last month that it would post a full year operating loss of £150m, meaning the three months to end March would see it plunge nearly £240m into the red.
BA's CEO Willie Walsh said he was not expecting the economic backdrop to improve in the short term.
'The trading environment is very tough - external circumstances will determine what happens, but we are planning on not seeing any major improvement for the next 24 months,' Walsh said.
He added that the group's cost base was under review, and that certain jobs might be cut despite the departure of nearly 500 managers on a voluntary redundancy basis late last year. 'We are continuing to look at the numbers of people employed - it is regular activity,' Walsh said.
The news comes against a backdrop of contrasting fortunes for European airlines. Rival Air France-KLM issued a profit warning last month, but the last of the big three full-service European carriers, Lufthansa, surprised the market earlier in the week by raising its 2008 profit forecast.
Low-cost carriers easyJet and Ryanair have also raised recent forecasts, saying travellers are trading downwards during the recession.
BA is still in merger talks with Spanish partner Iberia more than six months after discussions were announced, and Walsh said he shared recent optimism from Iberia Chairman Fernando Conte that a deal could be struck.
'I share his optimism. We have made very good progress, and we expect that progress to continue,' he said, without giving a timescale for when a deal could be announced.
BA also said today its passenger numbers fell 1.3% year-on-year, while its load factor - an indication of how many paying seats were filled as a percentage of capacity - was up 1% at 73.2%. However, premium or first and business class traffic fell 13.7% year on year.
