? Q3 pre-tax profits of £65m compared with a loss a year ago
? Operating result advances £82m in quarter and £232m in nine months
? Yield continues to improve, up 8.3 per cent
? Overall capacity reduced by 3.9 per cent
? Excluding a 46 per cent rise in fuel costs and the impact of exchange rate changes, unit costs fell 3.1 per cent
? Earnings per share were 5.4p, compared with a loss of 6.6p last year
British Airways today reported pre-tax profits for the nine months to December 31, 2000, of £215 million. Operating profits for the nine months were £441 million, up 111 per cent on last year. Group profits before tax for the three months to December 31 were £65 million, £125 million up on a year ago.
Passenger yield in the quarter continued to improve with an 8.3 per cent year-on-year increase. Excluding a 46 per cent rise in fuel costs and exchange rate movements, unit costs fell by 3.1 per cent despite the upward pressure of a 3.9 per cent reduction in overall capacity. Operating profit in the quarter rose to £80 million.
These results reflect the reduction of unprofitable capacity and continued cost efficiencies. Smaller aircraft, higher frequencies and a more profitable mix of passengers have all contributed to the current performance. Continued implementation of the fleet and network strategy will further cut capacity by around 9 per cent next year. Key achievements in the quarter include:
? Product: The new Club World and World Traveller Plus products are now available on many of the airline’s longhaul routes. The First embodiment programme began in December. Full embodiment of all the new products on the longhaul fleet is due to be completed during 2002. The embodiment of Club Europe in the shorthaul fleet was completed early in the quarter.
? Fleet: Delivery of more new, smaller aircraft for both the longhaul and shorthaul fleets continues. Deliveries of the longhaul aircraft are due to be completed in 2002 and the shorthaul aircraft in 2005.
? Shorthaul: The review of operations at Gatwick has led to a shift from previous attempts to build Gatwick as a transfer hub and a refocusing of the operation over the next two years. The rationalisation of our shorthaul operations continues, with the integration of the management at CityFlyer Express and British Airways’ European Operations at Gatwick. Discussions on the sale of Go, the no-frills shorthaul airline, have reached an advanced stage.
Rod Eddington, Chief Executive of British Airways, said: “These numbers are encouraging and reflect the continuing improvements in the business. In a competitive marketplace, they show that we can continue to improve profitability by focusing on our core activities and the right network.”
Lord Marshall, Chairman of British Airways, said: “We are now two years into refocusing the airline and the benefits are now beginning to come through to the bottom line. The programme still has several years to run and will continue to evolve. But the basic principle remains the same: we will maximise shareholder value by focusing on profitable market sectors where our people will continue to deliver the best customer service.”