BA - Trading loss question.

[superlightr]

http://uk.news.yahoo.com/18/20090126/tuk-british-a...


£150 million operating loss -? how does it keep trading, is this the same sort of loss I as a small business would understand? ie if I make a loss one year, I have to fund the difference from my own money or go bust?

If the shareholders are not putting up the shortfall, where has the operating loss come from? BA savings? Banks? With the aim of making a trading profit the next year?

Edited by superlightr on Monday 26th January 15:29

[Neil_H]

Cash reserves (if any) and credit facility (overdraft) I imagine?

[GreenDog]

A few years ago BA owed over 6bn - its a lot less now I believe.

[superlightr]

GreenDog said:

A few years ago BA owed over 6bn - its a lot less now I believe.

If they owed 6bil or 15mil why are they still trading. Who would back that risk to lend them money to keep trading. You either have a good trading company that makes profit or you dont. Sure in the first few years you may need loans but how long has BA been going for?

[rude-boy]

Edit delete inappropriate comment and to add that I should read the thread more carefully.

Edited by rude-boy on Monday 26th January 16:04

[jamiebae]

Operating loss is a loss on the normal operations of the business, they could then make money on the sale of assets, hedging, trading shares etc etc which may offset that.

But in theory, yes, it's the same kind of loss you're talking about.

[miniman]

Running at a "loss" is not necessarily a bad thing tax-wise I suspect.

[youngsyr]

Operating loss is not the same as a cash loss, either.

I would imagine that a company could take a large write down assets and make a large operating loss despite actually generating a positive amount of cash from operations in the same period, in certain conditions.

[spikeyhead]

Supppose I have a company, a simple shop that I own and trade from.

In 2006 I bought goods that cost £100k and sold them for £200k

So there's a 100k profit, but that's gross profit.

However I had operating costs of £55k so that means I made a net operating profit of £45l

Now I've also depreciated the display stands by £3k and the shop increased in value by £10k.

I paid tax of about £7k (no i'm not going to work that one out properly), paid interest on the stock loan of £4k and amortized some of the increase in shop value to my other business as I also use some room in the stock room for that.

Complex thing accounting, I'll stick to paying an accountant to do the sums whilst I run my business, there's more differet ways of calculating profit or loss than I've had hot dinners.

[off_again]

superlightr said:

£150 million operating loss -? how does it keep trading, is this the same sort of loss I as a small business would understand? ie if I make a loss one year, I have to fund the difference from my own money or go bust?

http://www.britishairways.com/cms/global/microsite...

Might have something to do with having a revenue of over £8bn for the year ending March 2008, with operating profits of £875m. Some of which will be kept back, and as a business they will have a massive amount of credit available to them (called shareholders).

A £150m operating loss is actually very good in comparison to other airlines. Given that they have had go to through issues like oil being 3 times as much after 6 months and a massive downturn in flight numbers, that is pretty good going. Not perfect, but way better than many other airlines who operate on a thread.