British Airways cost reductions drive better than expected results

2 August 2002

British Airways today posted a pre-tax profit of £65 million (2001: £40 million profit) for the first quarter to June 30th, 2002. The operating profit for the first quarter was £158 million (2001: £50 million profit).

Passenger capacity, measured in available seat kilometres, reduced by 14.5 per cent for the quarter. Revenue passenger kilometres were down by 13.8 per cent for the quarter. Seat factor rose 0.6 points to 70.5 per cent in the quarter. 

Net costs were down 14.6 per cent for the quarter, and unit costs fell by 2.6 per cent in the same period. Revenue in the quarter, at £2,052 million, was down 10.7 per cent. Passenger yields were up 5.0 per cent primarily due to improved cabin mix.

The improved operating results reflect significant reductions in all areas of operating cost, including manpower, fuel and selling. 

Net debt was £5,866 million, down £428 million since the start of the financial year. This is due primarily to repayment of debt and a £182 million increase in cash to £1,401 million. 

Rod Eddington, British Airways’ Chief Executive, said: “ We are only six months into a two year structural change programme. Despite very tough market conditions we are delivering on cost efficiencies. We have always said our recovery will be cost driven and not dependant on an upturn in market conditions. That remains true. 

“These encouraging results are a testament to the professionalism and dedication of our staff around the world.”

Lord Marshall, British Airways’ Chairman, said: “The travel market continues to be subject to considerable global economic and political uncertainty, and is expected to remain soft for the remainder of the year. As a result, full year total group revenues are expected to be lower than last year and improvement in operating results will come principally through cost reductions.

“We remain confident that the implementation of our Future Size and Shape programme will deliver the expected efficiencies over this and the next financial year.”