British Airways (BA) has posted a 73 per cent fall in second-quarter operating profits to £72 million sterling and warned it expects a "significant operating loss" for the year.
But shares in Europe's largest airline by enterprise value firmed, extending a rally begun late yesterday, as the quarterly results easily beat most market expectations and investors began to see some hope.
"Most importantly we will survive the industry crisis," chief executive Mr Rod Eddington said. "We have taken swift action to control costs and conserve cash".
Most airline analysts had been tipping about £30 million to £40 million in operating profit for the three months ended September 30th, compared with the £264 million from a year earlier.
Mr Eddington said BA had £1.1 billion in cash, can draw against an £800 million bank facility and had £1.5 billion in "reasonably liquid" assets - including its 25 per cent stake in Australia's Qantas Airways.
The company's shares were up 4.4 per cent at 162 pence in early trade this morning. BA is spending about £2 million in cash a day.
The airline has cut 7,200 jobs, grounded 20 aircraft, scaled back operations at London's Gatwick Airport, reduced routes and cut back the number of flights.
"We are currently looking at what we call the future size and shape of British Airways," said Mr Eddington, who outlined more details on the talks with KLM Royal Dutch Airlines.
"We are talking to them at the moment, with Brussels's blessing, on whether or not we can do some work with our joint networks right now," said Mr Eddington.