Summary of the headline figures
On the back of a 2.3 per cent capacity reduction, traffic, measured in Revenue Passenger Kilometres, fell by 1.4 per cent in June. Premium traffic grew by 6.8 per cent and non-premium traffic fell by 2.7 per cent. Passenger load factor rose 0.6 points to 75.9 per cent.

These figures were impacted by the air traffic control problems on 17 and 18 June, and by the French air traffic control strike on 26 June. It is estimated that the impact was to reduce RPKs by 0.8 percentage points and to reduce ASKs by 1.3 percentage points.

For the first quarter of the year, RPKs grew by 2.8 per cent, with premium traffic growing by 8.1 per cent and non-premium growing by 2.0 per cent. With ASKs for the quarter falling marginally by 0.1 per cent, passenger load factor rose by 2 points.

Market conditions
The revenue outlook for the key summer season continues to give cause for cautious optimism with lower capacity growth in the market supporting yields and seat factors.

Costs
Jet fuel prices have continued to rise, and although the Group has hedged over 75 per cent of its fuel requirements for the remainder of the financial year. Increased prices and the strength of the US dollar against sterling will raise total fuel and oil costs for the year to March 2001 by around £40 million, if fuel prices persist at current levels.

At the end of June, the value of the yen stood at Yen 160.3 to the pound, compared to Yen 163.6 at the end of March. The Group will therefore have a non-cash accounting charge of £19 million in the first quarter financial results.

Strategic developments
British Airways and KLM announced that they are in talks on a possible combination of their businesses.

With the entry into service of the ninth Airbus A319 at Birmingham, the last Boeing 737-200 was retired from the Eurohub terminal. The first three A319s have also entered service at Heathrow. Three 737-200s remain in operation at Manchester and seven out of Gatwick.

British Airways and LanChile reached a code-sharing agreement providing connections between Santiago and London. From 1 August, British Airways will terminate its current Santiago service at Buenos Aires, and LanChile will operate connections between Buenos Aires and Santiago. This replaces British Airways’ London-Buenos Aires-Santiago service, which has struggles to make a profit since its introduction in 1993.

British Airways consolidated its leisure activities into one division, to offer an integrated range of leisure products and services. The division will be responsible for the complete range of British Airways leisure products sold through all distribution channels, including travel agents, tour operators, British Airways Telesales, Travel Shops and Britishairways.com.

British Airways renewed its franchise agreement with GB Airways for a further eight years. The Gatwick-based carrier has been a franchise carrier since 1995.

National Jet Italia, a start-up carrier, has been added to the British Airways franchise family, taking British Airways flights into the Italian domestic market for the first time. NJI will start flying from Rome to Palermo four times daily from 11 July.

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