http://observer.guardian.co.uk/business/story/0,,1933995,00.html
August terror threat to cost BA £100m Rise blamed on drop in business passengers after alleged bomb plot led to increased security checks Oliver Morgan, industrial editor Sunday October 29, 2006 <http://www.observer.co.uk/> The Observer British Airways is expected to reveal this week that the cost of the disruption arising from the terrorist threat to air travel in August is close to £100m, more than double the figure it has announced so far. A fall in the number of premium transatlantic passengers, particularly those transferring to other flights at Heathrow, is the cause of the increase, according to analysts. Business travellers have been put off travelling through Heathrow because of restrictions on hand baggage, a ban on carrying liquids on flights and increased security checks. The drop is forecast to cut BA's half-yearly profits by 10 per cent from last year's £261m. Last month the airline announced that the financial impact of the threat, in which terrorists are alleged to have planned to blow up airliners in mid-air, was £40m during August. BA had to cancel 1,280 flights because of disruption to London airports, and added that there had been an effect on forward bookings. One leading analyst said: 'August is not the end of it. I think there will be at least a £50m impact in September. Premium transfer traffic is significantly weaker for British Airways. Lufthansa and Air France will have seen an increase as a result. A 5-10 per cent reduction in transatlantic Club World [business class] traffic has a significant impact on BA's bottom line.' BA, along with other airlines, including Ryanair, have been highly critical of the government and airport operator BAA over the introduction of heightened security measures. Passengers have faced lengthy delays due to increased screening and checks. Hand luggage was initially banned, although small bags were later allowed, and restrictions on carrying toiletries on flights were imposed. At the end of last month, EU transport security officials agreed to an easing of the restrictions on liquids, to take effect from the beginning of this month. BA has become used to announcing one-off costs due to operational difficulties in the summer months. At last year's half-yearly results it announced that unofficial strike action by about 1,000 ground staff, in support of workers dismissed by catering company Gate Gourmet, had cost it between £35m and £45m because of flight cancellations during the peak August holiday period. It added that a similar amount had been lost in 2004 thanks to disruption, while in 2003, £40m was lost over more unofficial industrial action. BA watchers are also hoping for an update from chief executive, Willie Walsh, on negotiations with unions over its £2bn pension-fund deficit. Unions representing pilots and ground staff are holding meetings with the company in the lead-up to Friday's results presentation. Balpa, representing pilots, and the T&G, GMB and Amicus unions, representing ground staff, rejected company proposals for a £500m cash injection which would have involved an increase in the retirement age and reduction in benefits. However, BA signalled it was prepared to negotiate, and Walsh is keen to get a resolution by the middle of next month. Analysts are also likely to question Walsh on plans for a tie-up with Spanish airline Iberia. [Non-text portions of this message have been removed] -------------------------- Want to discuss this topic? Head on over to our discussion list, [EMAIL PROTECTED] -------------------------- Brooks Isoldi, editor [EMAIL PROTECTED] http://www.intellnet.org Post message: osint@yahoogroups.com Subscribe: [EMAIL PROTECTED] Unsubscribe: [EMAIL PROTECTED] *** FAIR USE NOTICE. 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