British Airways Passenger Numbers Down After Catering Staff Strikes

British Airways carried 3.9 percent fewer passengers in August, the airline said Monday, revealing the impact of last month's wildcat strikes by catering and baggage staff that forced it to cancel hundreds of flights.


British Airways carried 3.9 percent fewer passengers in August, the airline said Monday, revealing the impact of last month's wildcat strikes by catering and baggage staff that forced it to cancel hundreds of flights.

The biggest impact was felt on its premium-class cabins where traffic fell by 4.7 percent, BA said, appearing to bear out analyst concerns that last month's strikes and the ongoing disruption to its onboard meal service would turn away the airline's core market of high-end customers.

Forward booking levels during August, however, were "quite reasonable," said George Stinnes, BA's head of investor relations.

"We haven't seen anything that would worry us," Stinnes said during a conference call Monday, but cautioned that booking volumes are generally quite low in August because it is the peak traveling season.

BA was forced to suspend all its flights for around 30 hours last month when a decision by its caterer Gate Gourmet Inc. to fire almost half its London staff touched off strikes by workers at both companies. Cargo operations were disrupted for a further 24 hours as the airline focused on getting its passenger planes into the skies.

BA has since agreed to a new deal with Gate Gourmet that offers better terms and a longer contract, but this has not yet been signed because the caterer is still locked in talks with unions to resolve the labor dispute.

BA has not yet put a figure on how much the industrial action will cost the airline, but analysts estimate it has already cost as much as 40 million pounds (US$74 million; euro61.67 million). Stinnes acknowledged that such disruptions can have an impact on bookings over time.

BA's onboard meal service is still being affected by the dispute. Short haul flights have virtually no service with passengers being given vouchers to buy food at the airport.

The long haul flight service is more comprehensive with a range of hot meals and a full bar service due to resume Tuesday. However, specialist meals and other extra catering are not available.

BA's revelation that passenger numbers fell to 3.101 million in August came as Irish budget airline Ryanair Holdings PLC, which is a rival to BA on European short-haul services, said it carried 3.257 million over the same period _ marking the first time it has carried more passengers than BA in a single month.

Stinnes said that British Airways PLC remains a larger airline in terms of revenue passenger kilometers (miles), which measures how far passengers are flown.

"We carry our passengers much further than Ryanair does," he said. "If you measure on RPKs we're a considerably larger airline."

BA added that record fuel prices and currency swings were making accurate profit forecasting more of a challenge than usual, but reiterated its forecast that total revenue for the year to March 2006 would grow in the range of 5.5 to 6.5 per cent.

The company has now increased its fuel hedging cover for the rest of this financial year to 81 percent at an average cost of US$45 a barrel. It previously had 75 percent hedged at US$43 a barrel.

BA shares closed 0.3 percent higher at 280.75 pence (US$5.17; euro4.31) on the London Stock Exchange.

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