Shares digital

The already tattered reputation of British Airways (BAY) has taken a severe battering over the past week, following the disastrous opening of Heathrow’s Terminal Five on 27 March, resulting in cancelled flights and lost luggage. Such events have long been linked with the UK’s largest airline, but this latest fiasco has caused the airline further embarrassment, prompting chief executive Willie Walsh to make a public apology and analysts to speculate that costs relating to the debacle could hit £50 million.

But thanks to the start of the Open Skies agreement last weekend, disgruntled BA customers looking to fly with an alternative airline in the future will now be spoilt for choice. BA, American, United Airlines and Virgin Atlantic had previously been the only airlines allowed to fly to Heathrow from the US, but as of 30 March this monopoly has collapsed, providing customers with a wider choice of both airlines and fares. BA was due to transfer its North American services to T5 at the end of the month and had hoped punters would be wowed by its state-of-the-art facilities, but with most flyers now desperate to avoid it this date may be reviewed.

The resultant increase in competition and likely decline in passenger numbers will no doubt hit BA where it hurts. The shares, which touched £5 last year are currently trading around 242p and have also been left reeling by a recent downgrade to sell, from buy, by broker Goldman Sachs.

The airline sector as a whole has been under constant media scrutiny of late, with both Ryanair (RYA) and easyJet (EZJ) issuing profits warnings on the back of rising oil prices. Ryanair has since announced plans to close its Dublin Telesales Operation at the end of May, which could lead to up to 40 redundancies as part of its cost reduction programme. Its shares slid 2% to €2.8.

Shares says: A complete shambles.

SELL British Airways, Ryanair and easyJet

by: Rachel Robson