ba wont go bust23 Jun 2009 19:51
British Airways, once the “world’s favourite airline”, is still Sir Richard Branson’s favourite punch bag. The billionaire used the eve of Virgin Atlantic’s 25th birthday to rekindle the ardour of his rebellious business youth by tilting at his traditional adversary. BA, Sir Richard suggested, could go bust. Virgin had even thought about bidding for BA but abstained as “it’s not worth much any more”. Partly as a result, BA’s shares fell on Monday by 8 per cent. All airlines face tough times – and BA no worse than many others; over the past year, its stock price has fallen much the same as Lufthansa’s and Air France-KLM’s.
Meanwhile, the unlisted Virgin Atlantic group, which cut its ordinary dividend last year and made an operating cash loss before margin calls of £6m, looks pretty thinly capitalised itself. With shareholders’ funds of £144m, it had £309m of cash in hand in February, equivalent to 12 per cent of sales. BA meanwhile had £1.3bn, equivalent to 15 per cent. In short, BA is not going to go bust soon, even if it burnt through £200m or more this year.