Events | 2010.04.19
Volcanic ash cloud costing British Airways up to £20m daily
• BA will seek compensation from EU and government
• Tui Travel is losing up to £6m a day from travel ban
• Volcano lockdown leaves 100,000 Tui customers stranded
British Airways today said the chaos caused by the flight ban across much of Europe is costing it between £15m and £20m a day and that it would be seeking compensation from the EU and the UK government.
Tour operator Tui Travel estimated its costs at £5m to £6m a day while budget carrier easyJet put its costs at £5m a day. Shares in airline and holidays companies across Europe suffered sharp falls on stock markets as the disruption intensified.
BA chief executive Willie Walsh said: "This is an unprecedented situation that is having a huge impact on customers and airlines alike. We continue to offer as much support as we can to our customers. However, these are extraordinary circumstances that are beyond all airlines\' control.
"To assist us with this situation, European airlines have asked the EU and national governments for financial compensation for the closure of airspace. There is a precedent for this to happen as compensation was paid after the closure of US airspace following the terrorist events of 9/11 and clearly the impact of the current situation is more considerable."
British Airways shares were one of the biggest fallers in the FTSE 100, dropping just over 3% to 227p. Tour group Thomas Cook was down 4.5% at 249.8p, easyJet shares were down 5% at 545p and Tui Travel shed almost 4% to 280.4p.
BA said it has "significant funding available to it to sustain a considerable period of closure of the UK\'s airspace". At the start of the flying restrictions on 14 April, it had more than £1.7bn of cash and more than £400m in available credit lines it can draw on if necessary.
It said customers booked to travel on a cancelled flight can claim a full refund or rebook their flight for a later date.
Tui, the company behind Thomson Holidays and First Choice, said it is losing between £5m and £6m a day because of the flight ban. The disruption caused by the ash emitted from Iceland\'s Eyjafjallajokull volcano has already cost the holiday operator £20m, it said. About 100,000 of its customers are stranded overseas, and Tui is unable to bring them home while European airspace remains locked down.
"For the group, this is a period of relatively low holiday activity, but the disruption to our programmes will still have a financial impact," it said.
The company said it was providing "appropriate assistance" to travellers stuck in their holiday resorts. Customers who cannot begin their holiday because UK airports have been closed since late last week have been given the choice of a refund from Tui, or rescheduling their trip . About 90% of UK customers have chosen to rebook.
Tui added that it was working with other operators and airlines in the hope that regulators "permit the resumption of flights as soon as possible".
Tui reported last month that it was seeing a recovery in consumer demand as the summer trading period approached. In the last financial year it made an underlying profit of £366m, from revenue of £13.8bn.
The disruption is thought to be costing the global airline sector around £130m a day.
For more information, please visit
http://www.guardian.co.uk/business/2010/apr/19/ba-volcanic-ash-losing-money
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