Record loss at British Airways
British Airways today announced record annual losses of £401 million after suffering a near-£3 billion fuel bill in last year's oil price bubble.
The carrier's nosedive into the red comes after record profits the previous year and discloses the impact of the fuel hikes and dampened demand amid the recession.
BA confirmed it was now offering staff unpaid leave and the option to go part-time, having already frozen pay and axed more than 2,500 roles since last summer to cut costs.
Management will also forgo bonuses and the group is not offering any dividend payout to shareholders under a drive to offset BA's trading troubles.
Its annual pre-tax losses compare with profits of £922 million the year before, and today's result marks the worst seen since BA's privatisation in 1987.
BA said it had suffered in the "harshest trading environment we have ever faced", with revenues in the fourth quarter alone down 8.4% and pre-tax losses of £331 million.
The global economic woes have badly hit the premium travel market, down 13% in the last six months of the year for BA, and the group has had to offer cut-price discounts to keep non-premium travel broadly flat over the year.
BA recently launched its first two-for-one offer to help fill planes.
Martin Broughton, chairman of BA, said: "In the last twelve months we have gone from a record profit to a record loss due to the current tough economic environment.
"That only serves to underline the extremely difficult trading conditions that we are facing, despite our best ever operational performance, and any recovery is likely to take longer than initially envisaged."
The company warned there would be further job losses, but declined to say how many of its 40,000 workforce would be affected.
It said talks with unions over changes to productivity and pay were progressing well in some areas, but said discussions were going slowly in relation to consumer-facing staff in terminal buildings and cabin crew.
BA admitted its merger plans with Spanish airline Iberia were being held up by the internal trading issues faced by both groups.
Willie Walsh, chief executive of BA, said: "We're still in discussions - clearly those discussions have been ongoing for some time now.
"Iberia said they are focused on what needs to be done for the core business, which is exactly what we're doing."
He added: "The main issues between us remains those of corporate governance and those discussions are ongoing."
BA hopes to see a £400 million reduction in its fuel bill this year thanks to greatly lower oil costs, but trading conditions remain tough.
Passenger demand since the year-end has not improved, it confirmed.
BA has been reducing capacity to meet the lower levels of demand and said next winter would see a 4% cut.
The group is also exposed to the impact from a weak pound, although it said currency benefits over the past year helped total revenues rise 2.7% to £8.99 billion.
With currency effects stripped out, revenues fell by 3.7%.
BA shares opened more than 8% lower following the results announcement.