BA Nosedives As Top-Flight Customer Base Hits Hard Times

By DOUGLAS HAMILTON

SHARES in British Airways slumped yesterday on the London Stock Exchange as bankruptcies and job losses in the financial industry threaten its lucrative transatlantic business travel market.

Traders said the fall in BA stock was the worst in seven years.

British Airways fell as much as 30p, or 12per cent, to 213.25p and later closed 10.8per cent, or 26.25, cheaper at 217p. City aviation analysts described the fall in the airline’s share price as the steepest since September 20, 2001.

“Banks are shedding jobs and a lot of BA’s customers are bankers, ” said Geoff van Klaveren, analyst with Exane BNP Paribas in London.

Exane BNP Paribas has an “underperform” rating on British Airways shares.

Financial firms worldwide have cut more than 113,000 jobs since the collapse of the US sub-prime mortgage market. Lehman Brothers Holdings, which filed for bankruptcy on September 15, has about 6000 employees in Europe. British Airways gets half of its profit from London-US routes, according to analysts.

The drop in market value came only a few days after Willie Walsh, the company’s chief executive, said the airline industry was going through its biggest ever crisis, and repeated his warning that more carriers would go bust. “This industry is in crisis – a deeper, more protracted, more fundamental crisis than 9/11, the Gulf War or any of the previous shocks that have beset the industry since the age of mass air transport began in the 1970s, ” he said in a speech to the London Chamber of Commerce.

He added carriers would continue to go to the wall. “There will be more to come as we head towards the traditionally poorer returns of the winter travel season, ” he said.

Walsh used his dire outlook to justify the group’s merger talks with Iberia as well as his application for an antitrust alliance with American Airlines and the proposed building of a third runway at Heathrow Airport.

Elsewhere in the sector, shares in Ryanair Holdings rose and then fell after Europe’s leading budget airline raised its outlook and forecast it would break even because of the falling price of oil.

Chief executive Michael O’Leary told an annual meeting of shareholders at Dublin Airport that his airline no longer feared it would fall into the red this year He said a break-even was more likely as long as oil remained below dollars100 a barrel.

Ryanair umped 7per cent on the news but later fell back by 5.4per cent to euro5.74 on the Irish Stock Exchange.

Originally published by Newsquest Media Group.

(c) 2008 Herald, The; Glasgow (UK). Provided by ProQuest LLC. All rights Reserved.