BA: Good Results in a Difficult Year

British Airways today posted a pre-tax profit of £230 million for the full year to March 31, 2004 (2003: £135 million profit). There was a pre-tax profit for the fourth quarter of
£45 million (2003: £200 million loss).

The operating profit for the full year was £405 million (2003: £295 million profit). The operating profit for the fourth quarter was £32 million, £196 million better than last year.

Rod Eddington, British Airways chief executive, said: “We ended the year a stronger business despite the challenges faced by our industry.

“We have exceeded our two year Future Size and Shape targets. We achieved £869 million in cost savings against a target of £650 million and our manpower reduction at March 2004 was 13,082 against a target of 13,000.

“We have made significant progress in the restructuring of our shorthaul business and this is reflected in the improved results. There is more to do.

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“We continue to improve the customer experience with new products and greater use of technology. We have launched a new Club World sleeper service on selected longhaul routes and recently opened a new lounge and check-in area at Heathrow’s Terminal 1. Our stylish new uniform, designed by Julien Macdonald, has been well received by staff and customers alike. The first Airbus A321s join the British Airways fleet later this year.

“In the UK, two out of every three BA customers are travelling with an e-ticket. This year, we have installed 191 new self-service kiosks around the network and more than 50 per cent of our shorthaul leisure fares are now sold via ba.com in the UK.

“Our people have done a wonderful job in challenging circumstances. I thank them all.”

Lord Marshall, British Airways chairman, said: “Market conditions remain unchanged since our quarter three announcement. Longhaul premium volumes are recovering steadily, while shorthaul premium remains at lower levels. Non-premium volumes are very price sensitive.

“We are forecasting a 2-3 per cent revenue improvement in the current year. We expect small yield declines in the full year will be more than offset by volume. Fuel costs are now expected to be £150 million higher this year than last. The continuing focus on controllable costs remains key to long-term profitability.”

The Board has recommended that no final dividend be paid.

Group turnover for the full year was £7,560 million, down 1.7 per cent on a flying programme 1.5 per cent bigger in available seat kilometers (ASKs). For the quarter, group turnover was up 10.7 per cent on a flying programme 4.5 per cent higher in ASKs.

Revenue passenger kilometres (RPKs) were up 3 per cent for the full year and up by 6.4 per cent for the quarter. Seat factor was up 1.1 points for the full year at 73 per cent - its highest since 1997 and up 1.3 points in the quarter to 70.8 per cent.

In the quarter, capacity was up 6.7 per cent in available tonne kilometers (ATKs), net costs were down 2.5 per cent, resulting in a unit costs improvement of 8.6 per cent. Excluding the exceptional Concorde write-off costs in last year’s results, net costs increased by 2.5 per cent but unit costs still improved by 3.9 per cent.

Operating cashflow for the full year was £1,093 million, down £92 million on last year. Cash inflow, before financing, was £874 million. Net debt at £4,158 million, fell by £991million from March 2003 and by £2.4 billion from the December 2001 peak to its lowest level since December 31, 1997. Gearing is at its lowest level since 1992 at 53.9 per cent.


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