BA says August passenger traffic down 0.7%

LONDON (XFNews) - British Airways PLC said its passenger traffic fell 0.7 pct in August, a month that saw two days of industrial action by Heathrow ground staff.

The reduction in traffic, measured in revenue passenger kilometres (RPKs),comprised a 4.7 pct decrease in premium traffic and a 0.2 pct fall in non-premium traffic.

Passenger capacity, measured in Available Seat Kilometres (ASKs), was 1.1 pct below August 2004. This meant the passenger load factor -- passengers as a proportion of the number of seats available -- was up 0.2 points versus last year to 77.9 pct.

The UK flag carrier estimated the August 11 and 12 industrial action reduced ASKs by some 4 pct. In the same month last year operational disruption had reduced ASKs by 1 pct. In absolute terms BA carried 3.1 mln passengers in August, a fall of 3.9 pct on last August. Cargo, measured in Cargo Tonne Kilometres (CTKs), fell 10.2 pct.

Overall load factor fell by 2 points to 69.5 pct. "The uncertain economic outlook and volatility in both fuel prices and the US Dollar exchange rate, together with the impact of industrial disruption, make accurate forecasting even more of a challenge than usual," BA said.

However, it said market conditions remain "broadly unchanged" -- an indication that advance bookings from BA's key premium long haul travellers in first and business class have not been put off by August's disruption. The airline continues to expect total revenue for the year to end-March 2006 to grow in the range of 5.5-6.5 pct. Capacity and volume are still expected to increase by about 3 pct with total yield (average fares) flat.

BA added that it now has 81 pct fuel hedging cover in place at an average cost of 45 usd per barrel for the remainder of the financial year and 40 pct cover for financial year 2006/07 at an average cost of 50 usd per barrel. About 1,000 BA members of the Transport and General Workers' union -- baggage handlers, loaders, cargo workers and bus drivers -- walked out on August 11 and did not return to work until the following afternoon, halting flights into and out of Heathrow for over 24 hours.

Their action was in sympathy with over 600 fellow T&G members at Gate Gourmet, the Heathrow-based in-flight caterer, who were sacked on August 10 by its American management following a long-running dispute over restructuring and pay. BA has agreed the terms of a new deal that improves and extends its commercial arrangement with the currently loss-making Gate Gourmet.

It has said it will sign the deal only when Gate Gourmet, which is owned by Texas Pacific Group, the US private equity firm, and the T&G resolve their outstanding labour issues. Last week Gate Gourmet set out a voluntary redundancy programme for its UK workforce. BA said today it is not funding this package. The airline has not yet put yet put a figure on the cost of the dispute.

However, analysts estimate it at 35-40 mln stg. Weekend reports suggested BA will this week hike its fuel surcharges again following the sharp rise in oil prices in the wake of Hurricane Katrina. "It's under review," said a spokesman for the airline. At 4.24 pm shares in BA were up 1/2 pence at 280-1/2.

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