"Airline industry in biggest ever crisis": BA's Willie Walsh

Published: 17 Sep 2008

British Airways chief executive Willie Walsh has stated that the airline industry is in its deepest crisis and alerted 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.

BA expects its fuel bill for the current year to jump by £1 billion, a cost which could easily wipe out group profits. For the 12 months ending March 31, the airline reported a pre-tax profit of £883 million when its average oil price was $70 a barrel.

"Our fuel bill now represents about 35 percent of our costs, compared with less than 10 percent at the start of this decade. Meanwhile, demand for travel has weakened because of the general economic downturn and a decline in consumer confidence," Walsh said. "All in all, this is a devastating combination."

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Pitkin said on 18 Sep 08:

Mr. Walsh is certainly correct that the airline industry is facing a crisis. But, it's much larger than just the one industry. As the airlines cut routes and raise ticket prices, many other industries are going to suffer. For example, it is quite likely that business and first-class travel is going to see a drop, and there will certainly be fewer premium tickets sold for quick trips from New York to London.

While I have great sympathy for the plight of the airlines, I must question how much of the increase in fares and drop in profits is related to fuel costs.

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