British Airways Romania: Worst downturn of the airline industry

Operating margins of 10%, much above the industry mean, plans of launching new flight routes in Europe and in other continents, an average price of fuel of 78 US dollars/barrel - all these data are included in the annual earning report for 2007-2008 posted late March by British Airways.

“After 9 11th 2001, we needed only 4-5 months to recover”

After merely six months from the financial outcomes, things have completely shifted downwards: British airline operator is standing by the expansion plans, as over 2,000 managers were offered to leave the company last month only, and British say only luck will make them end this year without loss.

All these problems are caused by a “toxic mixture”, as the company’s representative call it, between global financial crisis, unprecedented hike of fuel price, and 35% downslide of the consumer’s trust index in Great Britain.

“Worst crisis period in the history of recent airline industry, apart from this one was the one triggered by 9 - 11th. However, at that time, we needed only 4-5 months to recover. Now, I think the market will recover in the summer of 2009 at the soonest,” Emil Delibashev, commercial manager British Airways Romania & Bulgaria.

Emil Dulibashev took over the helm of the company after Corina Enciu left the company.

If for financial year 2008-2009 the operator hopes to end it on zero, British Airways hopes to come back on profit in 2009-2010, targeting 7% operating margin, as the average margins of the industry range from 3% to 5.5%.

Although Britsh Airways was seriously damaged by the actual economic context, the company hopes to be one of the few survivors of the crisis. “The winter season, will bring at least 30 bankruptcies which will add to already declared 31 failures in the past four months” British operator noted.

If the bankruptcy is the worst consequence that players in the market will have to face, another consequence, less drastic is a strengthening of a segment, where number of players, traditional carriers or low cost operators was growing.

“The strengthening process is inevitable, and it can be healthy to some players,” he added, giving as example the company he heads, which will complete in 2009 the merger process with Iberia.

Translated by Camelia Oancea

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