London, Monday May 20, 2002: British Airways today posted a pre-tax loss of £200 million (2001: £150 million profit) for the full year to March 31, 2002, well ahead of market expectations. There was a pre-tax loss for the fourth quarter of £85 million (2001:£65million loss).
The operating profit for the fourth quarter was £35 million, £96 million better than last year, with a full year operating loss of £30 million, all excluding exceptional restructuring costs of £80 million (2001: £380 million profit).
Passenger capacity, measured in available seat kilometres (ASKs), reduced by 12.6 per cent for the quarter and 12.4 per cent for the full year. Revenue passenger kilometres (RPKs) were down by 5.9 per cent for the quarter and 13.7 per cent for the full year. Seat factor up by 5.1 percentage points to 72.1 per cent in the quarter, down 1 percentage point to 70.4 for the full year.
The actions taken by British Airways in response to the global economic slowdown earlier in the year and decisions immediately after September 11 have driven the improved quarterly cost performance. The effect of the company’s Future Size and Shape review announced in February will be realised during this financial year and the next.
Total costs were down 12.1 per cent for the quarter, and unit costs fell by 2.8 per cent in the same period, all before exceptional restructuring costs. Total overall costs for the full year fell by 5.9 per cent, excluding exceptional restructuring costs.
Rod Eddington, British Airways’ Chief Executive, said: “We have had to take a series of tough decisions this year to protect British Airways for the long term. It has meant sacrifice and hardship for our people.
“The market is expected to remain soft but the swift and decisive actions we have taken show we are determined to return the business to acceptable levels of profitability. The cost reductions have helped to deliver better than expected year end results. The quarterly improvement is due to the dedication of staff in delivering cost efficiencies and high standards of customer service during these difficult times.”
“Throughout the year ahead, our drive on costs will continue along with tight capacity management and cost control. These are key to our ‘Future Size and Shape’ recovery strategy.”
Lord Marshall, British Airways’ Chairman, said: “Reform and re-structuring against a substantially changed competitive background are well under way. The concentration is on providing customers with the services they want at prices which are of value and at costs which make a satisfactory return for shareholders.
“The current year is one of transition and still subject to global economic and political uncertainty. The market is expected to remain soft but further capacity cuts should help to underpin yields and to support increases in seat factors. In a weak revenue environment, costs remain the focus.”