ATW Daily News

British Airways more than doubles fiscal-year profit to £694 million

Monday May 19, 2008

Despite rising fuel prices, an economic slowdown and the troubled opening of London Heathrow's Terminal 5 in the last days of its fiscal year, British Airways reported a record profit performance for the year ended March 31 with net income of £694 million ($1.35 billion), more than double the £304 million it earned in the prior year.

It also delivered on its goal of a 10% operating margin for the 12-month period. Total revenue was up 3.1% to £8.75 billion while operating expenses rose just 0.7% to £7.87 billion. Operating profit climbed 45.3% to £875 million from £602 million a year earlier.

CEO Willie Walsh commented, "Delivering 10% has not been easy, but we have achieved it by remaining focused on our strategy for the last six years. We tackled our pension deficit and we have strengthened the fundamentals of our balance sheet while at the same time growing a profitable business."

Full-year passenger revenue rose 3.8% to £7.5 billion on a 0.3% increase in passengers carried to 33.1 million. RPKs inched up 0.1% to 113.01 billion and capacity grew 0.8% to 149.57 billion ASKs, producing a load factor of 75.6%, down 0.5 point. Yield lifted 3.6% to 6.67 pence owing to an improved mix of premium traffic and the effect of fuel surcharge increases. Premium cabin traffic grew 4.4%. RASK was up 2.9% to 5.04 pence. Cargo revenue increased 3% to £616 million but cargo yield dropped 1.2% to 12.59 pence.

Looking forward, Walsh warned that the first quarter will be "particularly" difficult owing to fuel price increases and the delayed transition of all flights to T5. The full year will "also be challenging," BA said. "As a result, we have reduced capital expenditure and are reviewing our capacity, costs and network in the context of the economic pressures and high fuel prices." It expects FY09 revenue to rise around 4% and nonfuel costs to grow 3%-3.5%.

Separately, BA's startup transatlantic subsidiary OpenSkies received approval Friday from US Dept. of Transportation to begin operations. BA said the approval was the last regulatory hurdle it needed to clear and that OpenSkies' 757 premium service will launch next month with flights between Paris Orly and New York JFK (ATWOnline, May 16). DOT also approved OpenSkies' codeshare arrangement with L'Avion, the French premium carrier.

by Cathy Buyck

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