Market conditions deteriorate sharply in November (06/02/2009)

British Airways World Cargo has reported commercial revenue (flown revenue plus fuel surcharges) of £536.6million for the nine months beginning April 2008. This represents an increase of 18.3 per cent against the same period last year. Excluding the impact of exchange rate movements, commercial revenues were up 12 per cent.

Volumes of 3,603 million cargo tonne kilometres (CTK) for the nine months represent a decrease of 1.6 per cent versus last year. Cargo capacity for the same period was down 3.6 per cent. Overall yield (commercial revenue per CTK) increased by 20 per cent versus last year. Excluding the impact of exchange rate movements, yield increased by 14 per cent.

A marked and growing deterioration in market conditions began during the third quarter of the financial year (October to December 2008). Commercial revenue for the quarter stood at £173.8m, a decrease of 4.7 per cent after the effects of exchange rate movements are removed. Volumes in the quarter were down 8.4 per cent versus the previous year, and overall yield for the third quarter increased by 4.0 per cent when the impact of exchange rates are removed.

Sean Doyle, financial controller, comments: "The year to date performance is reflective of a strong first half of 2008 offset by a dramatic softening in the last quarter. The weakness of sterling and higher fuel surcharges compared to the previous year mask the underlying deterioration in trading conditions in quarter three. The 8.4 per cent decline in volume reflects the reality that there was no visible pre-Christmas peak and the downward trend in price as a result of excess capacity continues to be a feature in all of our key markets."

Steve Gunning, managing director, adds: "The turndown in market conditions since November has been unprecedented and we have yet to see it level out. The situation is exacerbated by the ongoing imbalance of available capacity and market demand. The need to protect customer service whilst achieving productivity improvements and cost savings has never been greater."