BRITISH AIRWAYS has said it will break even this year, rebounding from a record loss, if demand for business trips continues to gain and chief executive Willie Walsh wins his 15-month tussle over cabin-crew expenses.

A return to profit “requires permanent change across the company”, Mr Walsh said yesterday after the London-based company’s net loss widened to £425 million (€489 million) in the year to March 31st, from £358 million a year earlier.

The loss, BA’s largest annual deficit since it was privatised in 1987, was less than the £590 million shortfall predicted by analysts.

Mr Walsh said he intended to resume negotiations with the Unite union last night in an effort to head off three weeks of strikes by 12,000 flight attendants that start on May 24th.

While volcanic ash from Iceland is also weighing on earnings, a rebound in demand and cost savings of £1 billion last year should help eliminate losses in the 2011 fiscal year, he told reporters.

“To break even on top of the volcanic ash and the strikes that they must know are going to happen is pretty upbeat,” said Douglas McNeill, an analyst at Charles Stanley in London. “BA has done well on cost control, they’ve taken out a huge amount.”

While sales slumped 11 per cent last year to £7.99 billion, fuel costs dropped £597 million and the company cut other expenses by £397 million as it reduced capacity and renegotiated contracts with pilots and ground staff.

Passenger revenue is beginning to pick up following a 3 per cent slump in traffic in the fiscal year, which saw the most lucrative first- and business-class travel declining in nine of the 12 months.

Corporate bookings are now increasing in the key transatlantic market, and that should help end losses on a pretax basis this year, the company said.

Premium passengers make up 13 per cent of the total but contribute 45 per cent of revenue, Mr Walsh said. – (Bloomberg)