06-Oct-2009 12:15 PM

British Airways’ premium demand still well down, but starting to level out?

British Airways reported a 7.9% reduction in premium traveller numbers last month – the smallest reduction in over 12 months. But Sep-2008 premium volumes had fallen 8.6% year-on-year, meaning last month’s performance was off a very weak base.

BA, which does not provide monthly yield data, stated, market conditions remain “unchanged, with yields under pressure from the year-on-year impact of lower fuel surcharges, exchange movements and mix”.

Overall passenger numbers fell 0.8% year-on-year in Sep-2009, including a 0.7% increase in non-premium traffic.

British Airways’ premium vs non-premium passenger numbers growth (% change year-on-year): Sep-08 to Sep-09

In Sep-2009, BA cut capacity (ASKs) by 3.7%, while RPKs fell 0.8%, resulting in a 2.4 ppts increase in load factor to 81.3%. Cargo, measured in Cargo Tonne Kilometres, fell by 2.6%.

Premium demand falls level off?

BA stated, “premium traffic comparisons are starting to be against a weaker base, with the bankruptcy of Lehman Brothers occurring mid-way through September 2008”. A 12-month moving average of British Airways’ premium demand shows a flattening last month after more than a year of reductions.

British Airways’ premium passenger numbers growth: 2-year change and 12 month moving average: Sep-08 to Sep-09

British Airways is hoping to report growth in overall passenger volumes again in the New Year. A spokesman stated, “in January, the comparative figures take another step down and there's every chance of getting into positive territory then”, adding “until then we see traffic flattening and steadying”.

British Airways’ shares gained 3.2% yesterday, while Air France-KLM gained 2% and Lufthansa rose 0.4%.

Europe selected airlines daily share price movements (% change): 05-Oct-09