British Airways on Thursday said it will stay in the red in fiscal 2010 as the global recession continues to erode demand for air travel. In a statement before its investor day, Europe‘s third-largest long-haul airline said it expects its operating result for the year ending March 31, 2010 to be "similar" to the 150 million-pound ($213 million) deficit forecast for the current fiscal year. The British Airways (UK:BAY: news , chart , profile ) forecast didn’t come as a surprise to the market. Analysts polled by FactSet expect it to post a loss before interest and tax of 151.5 million pounds in the current year, followed by a 137 million-pound loss in the next fiscal year.

The airline sees revenue in the current year rising 3.5%, but expects a 5% drop next year. The decline will be partly offset by efforts to cut 220 million pounds in underlying non-fuel costs this year and a further 80 million pounds the following year. Meanwhile, fuel costs are seen dropping 10% in the next fiscal year. The shares fell 3% in London morning trading. The stock is down about 49% over the last 12 months.

Decision on antitrust immunity this fall
In its presentation to investors, the airline also provided an update on its application to the U.S. Department of Transportation to form a commercial joint venture with AMR Corp.’s American Airlines and Spain‘s Iberia. The agreement would allow the airlines to coordinate pricing and schedules. The planned tie-up would also be a revenue-sharing deal.

British Airways filed the application back in August and said it’s progressed a bit more slowly than expected. But it told investors that the information-gathering phase was "very close to completion" and that a firm decision should come in September or October. Meanwhile the airline said it has a team already working on implementation with American Airlines.

British Airways also talked in detail about the impact of the recent decline of the British pound against the euro and the dollar. It said the weakness of the pound is making the transatlantic market even more appealing and that it plans to focus on gaining European and North American customers. These customers pay for their tickets in their home currency, which translates into higher revenue for the airline.

In addition, British Airways estimated that the currency’s decline gives it a 5% to 10% improvement in its relative competitiveness versus key European and U.S. competitors.

source: www.marketwatch.com