British Airways (BA) is expected to cut services from October as it battles through a period of high fuel prices which CEO Willie Walsh believes will account for the downfall of more airlines yet.
Despite its nearly billion-pound profit in the first three months of the year, the flag carrier is reviewing capacity, costs and its network because of crude prices which have risen from $58 to $115 per barrel in the last year, and which reached $126 last week.
”Given the global economic situation and fuel price it will be sensible to review capacity for the forthcoming winter,” a BA spokesman told ABTN. ”Whether we shall [cut it] or not will come out in due course ” it”s still under review ” but we will announce details in the coming months.”
Grounding parts of the fleet would be a drastic step reflecting just how serious a threat the high cost of oil is to the industry. BA cut services by around 20% during the two years after the 9/11 terrorist attacks, but it is not thought the carrier will halt as many flights now.
However, as a consequence of the fuel problem Walsh said: ”There is no question we will see airlines fail ” if you look at the US market, the airlines there are in a bad state.”
BA aims to consolidate to some extent with two US carriers - American and Continental - both of which it has been in talks with for some time. When Continental broke off merger talks with United Airlines in April, the carrier”s chairman and CEO Larry Kellner said it was ”considering alternatives to SkyTeam”, and these three together would create a powerful transatlantic triumvirate better equipped to battle the transatlantic competition in the new Open Skies era.
Sir Richard Branson, Virgin Atlantic president, reacted furiously to this possible alliance earlier this month: "This triple whammy would reduce effective competition across the Atlantic and the regulators should make it absolutely clear that it would have no chance of getting off the starting grid.”
” BA”s court clash with Balpa begins today (19 May) which will determine whether airline pilots have a right to strike regarding the outsourcing of jobs for the OpenSkies subsidiary ” which Walsh confirmed on Friday will launch on 19 June.
When asked if the airline is optimistic of the Court ruling in its favour, the BA spokesman told ABTN: ”We”ll put our arguments forward and see ” we”re making our launch plans.”