Summary of the headline figures
Traffic and capacity continued the trend seen in recent months. Capacity, measured in Available Seat Kilometres, fell by 2.8 per cent in September. Traffic, measured in Revenue Passenger Kilometres, rose by 0.7 per cent comprising a 6.6 per cent growth in premium traffic and a 0.3 per cent decline in non-premium traffic. The rate of growth in premium traffic is slightly slower than in recent months, reflecting the suspension of the Concorde services. Passenger load factor rose 2.7 points to 76.9 per cent. Cargo continued to improve with a 6.4 per cent increase in Cargo Tonne Kilometres.

For the second quarter, ASKs fell by 2.3 per cent, with RPKs growing by 0.1 per cent. This resulted in a 1.8 percentage point increase in mainline quarterly load factor, to 77.7 per cent. The traffic growth comprises a 7.2 per cent rise in premium traffic and a 1.0 per cent decline in non-premium traffic. Cargo Tonne Kilometres for the second quarter rose by 9.4 per cent.

Market conditions
Trading through the second quarter has been much improved on the same period last year. Load factors have been high and there have been yield improvements on both the longhaul and shorthaul networks.

Costs
In line with many of its competitors, British Airways has implemented a price increase across all routes to partially offset the high cost of fuel. This three per cent increase on worldwide published fares will help to mitigate the estimated £270m increase in fuel and oil costs for the current financial year.

As a result of changes in the sterling:yen exchange rate, there will be a non-cash accounting charge of £7 million in the second quarter financial results.

Strategic developments
British Airways and KLM announced that they will not be proceeding any further in their talks on a possible combination of their businesses.

British Airways announced that it will provide UK travel agents with a further three months to prepare for the introduction of its new travel agents’ payment scheme, which will now begin on April 1, 2001. This will allow additional time for British Airways and travel agents to carry out rigorous system testing and for agents to adapt their own systems to meet their individual business needs.

British Airways and internet agency DoubleClick signed a landmark on-line advertising deal, spanning 14 countries on four continents with a potential monthly global audience of over 33 million people. The deal will enable British Airways to take advantage of the latest on-line advertising technology to raise its profile across top business, finance and travel websites, as well as general portals such as AltaVista.

Deutsche BA, British Airways’ wholly owned German subsidiary, adopted the ‘BA’ prefix next to its own ‘DI’ codes on German domestic routes and two international routes from Germany to Spain. The codeshare covers 15 German domestic routes between Munich, Cologne, Berlin, Hamburg and Düsseldorf, as well as Deutsche BA’s daily flights between Munich and Madrid and Munich and Barcelona.

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