First quarter results meet expectations

British Airways today (Monday August 7) announced a pre-tax profit of £8 million, before disposal losses of £58 million, (Q1 1999: £23 million) for the three months to June 30, 2000, in line with market expectations. A pre-tax loss of £50 million resulted.

Operating profits for the period were £97 million (1999: £94 million), in spite of significantly higher fuel costs.

Group turnover for the three-month period was up four per cent, at £2,310 million, on a flying programme 2.2 per cent less in available seat kilometres (ASKs) in line with the group strategy. The revenue outlook for the key summer season continues to give cause for cautious optimism, with lower capacity growth in most market segments supporting yields and seat factors.

Yields continue to improve with a 2.9 per cent year-on-year increase. Premium traffic is showing good growth, rising by 8.2 per cent in the quarter, and cost efficiencies continue to be delivered. Whilst British Airways has hedged over 75 per cent of its current year fuel requirements, high fuel prices continue to impact upon profitability, accounting for an additional cost of £76 million compared to the equivalent period last year.

British Airways remains committed to offering the best possible service to all its passengers and today World Traveller Plus, a brand new class of travel for long haul economy passengers, has opened for business. Passengers can book seats in World Traveller Plus on flights from London, Heathrow to New York, JFK for travel from October 29. Customers will benefit from their own dedicated cabin, with up to 40 wider seats offering significantly more leg-room, in-seat PC power and telephone, double hand baggage allowance and an enhanced service at an affordable premium.

Discussions continue between British Airways and KLM on the possible combination of these businesses.

Rod Eddington, Chief Executive, said: "These results reflect the scale of the challenge we face in a highly competitive and price-sensitive market. However, we are also beginning to see the benefits of the investment we have made in every section of the aircraft. The growth in premium traffic has been strong and yields throughout the airline are up. The first aircraft with the World Traveller Plus product took to the air last Friday."

Lord Marshall, Chairman, said: "The increased demand in business and leisure travel continue to have a beneficial effect on yields and load factors. We remain encouraged by the generally favourable economic climate which prevails in most of our key markets around the world. However, the effect of a persistently strong pound on British manufacturers and the high cost of fuel gives cause for concern."