British Airways plc sees some turbulence in its horizon. After announcing July 29 that it is negotiating a merger with Spanish airlines Iberia Líneas Aéreas de Espana SA, the British carrier confessed three days later that it has revised its earnings outlook downwards for the full year.
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British Air forecasts that it will grow around 3%, "compared with its previous forecast" for an increase of 4% for 2008. The company also said Aug. 1 that its profit dropped 90%, to £27 million ($53.5 million), on a 2.8% increase in revenue, to £2.259 billion. Surprising? Not really.
The airline industry has been clamoring over surging fuel prices, rising labor costs and slowing economies. Despite hedging its fuel, the company said every $1 climb in crude oil
will slice £8 million from earnings, down from an earlier
forecast of £16 million. - Gerald Magpily
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