Moody's may cut British Airways

Moody's Investors Service said it has placed the Ba3 corporate family and probability of default ratings of British Airways plc and the senior unsecured and subordinate ratings of B1 and B2 under review for possible downgrade.

The rating action reflects the continued weakening in profitability in the first half of FY2010 to September, with an operating loss of £111 million reported versus a profit of £140 million a year earlier, and its view that losses in FY2010 will likely be higher than in FY2009, the agency said.

Moody's noted that this comes in spite of lower operating costs, notably for fuel, as demand in the industry remains very depressed, while the company has successfully reduced its employee and selling costs.

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