The board of British Airways has been forced to assess the impact of a possible £900 million reduction in profits this year caused by the rising price of oil.
Martin Broughton, the chairman of BA, admitted yesterday that the board had debated what would happen if the airline was in a “break-even position” by the end of this financial year.
This is a remarkable scenario for the company to be considering having just revealed record operating profits of £875 million last year.
However, BA's profits are expected to collapse in the coming months as the sustained high price of oil pushes up its costs.
In a conference call with investors, Mr Broughton said: “We had quite a debate at the board as to what happens if we get into a break-even position and the crude objective is not to get into a break-even situation but to stay profitable.”
This pessimistic outlook stunned investors who said it demonstrated how serious the coming downturn could be.
Emphasis added by me.
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