Summary of the headline figures
In line with British Airways strategy, January capacity was below that of a year ago, premium traffic was higher and non-premium traffic lower. Premium traffic rose by 5.2% with all brands performing strongly. Non-premium traffic fell by 7.1%.

British Airways mainline scheduled Available Seat Kilometres (ASKs) in January were 1.3 per cent lower than January 1999. Traffic, measured in Revenue Passenger Kilometres (RPKs), was 5.5 per cent lower. This reflected in particular the weakness of traffic at the end of the Millennium holiday period. Passenger load factor for January was 2.7 points lower than last year at 60.9 per cent. Cargo tonne kilometres rose by 6.7%.

Market conditions
Trading conditions continue to be challenging. Excess capacity on the North Atlantic continues, and the weakness of the euro is depressing European fares. However, the continuing growth in premium traffic relative to non-premium traffic is encouraging and the mix effect will offset pricing pressure. Bookings from the sales promotion launched in January will help to mitigate the impact of subdued bookings towards the end of the current quarter.

Costs
British Airways announced plans for fundamental change to the way the airline works with UK travel agents following extensive consultation with agents and customers. The current standard seven per cent commission payment will be replaced by a fee based structure, with charges paid for the basic service of making a booking, issuing travel documents and collecting the fare. Agents will be free to charge additional fees for any other services which customers require such as dedicated service desks and travel policy advice. Some fares will be adjusted to take this new scheme into account.

In the light of the continued high fuel price, British Airways has followed the lead of several US carriers by raising premium fares and most economy fares across the North Atlantic by 3% effective from February 1.

At the recent product launch, Chief Executive Bob Ayling said that he was targeting further cost reductions of 12% by March 31, 2003

Strategic developments
British Airways presented its new products and announced the introduction of a new cabin class, World Traveller Plus. This cabin will offer more space and facilities than World Traveller for a premium to the full World Traveller fare. The Club World ‘Lounge in the Sky’ will feature the world’s first fully flat bed for business class travellers who need to work and sleep in private on longhaul trips. The new Club World product enters service from this week and services between London and New York JFK will be fully embodied with both Club World and World Traveller Plus by Summer 2000.

British Airways took delivery of its first two Boeing 777 Extended Range aircraft, commencing the next stage of implementing the strategy of smaller, more profitable aircraft.

British Airways completed the purchase of an 18.3 per cent shareholding in Comair, its franchise partner in Southern Africa. The £17 million (R168 million) investment marks a further cementing of the successful relationship between the two airlines, which began in October 1996 when Comair became British Airways’ first franchise outside Europe.

British Airways agreed to sell Galileo UK to Galileo International Inc. Galileo UK distributes Galileo systems to travel agents across the UK.

Other highlights
British Airways launched the world’s first commercial interactive TV service offered by an airline. The service will appear within the interactive TV travel sections of the UK cable companies Cable & Wireless Communications, ntl and Telewest. More than 60,000 customers in the North West are already enjoying the world`s first digital interactive cable service with Cable & Wireless Communications. The technology is now being developed to allow for full e-commerce, with on line booking planned for this year.

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