IAG, the parent company of British Airways, published its 2017 results on Friday.
The share price fell sharply (5.7%) after the numbers were released.
The most astonishing number is on page 14 – CASK exc fuel for BA. CASK is ‘costs per available seat kilometre’.
As we know from various BA management pronouncements over the last 18 months, the airline is now 100% focused on cost reduction. Every British Airways employee, every day, is permanently focused on cutting expenditure.
Vueling cut its CASK by 0.9%. Aer Lingus cut CASK by an impressive 6.4%. Iberia couldn’t control costs so well and its CASK went up by 4.8%.
And British Airways? CASK rose by a whopping 5.4%. Remember that this excludes fuel, which the airline cannot control. Heaven knows what would have happened if all BA employees were not 100% focused on cost cutting …..
It is also worth pointing out something interesting on Slide 27. BA’s ‘Plan4’, which is the catch-all phrase for the various customer-facing changes being made, is listed as a key cost reduction activity. Not, note, as an ‘investment’. Whilst the company may be claiming that it is ‘investing’ £400m / £600m or whatever the number is this week in Club World, it is telling the City that this is actually a cost-cutting programme.
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