Pre-tax profits up 400 per cent on a year ago, well ahead of expectations
Operating result advances 125 per cent in quarter and 71per cent in half-year
Yield shows record 8.7 per cent improvement
Costs held despite 57 per cent rise in fuel prices
Interim dividend maintained at 5.1 pence a share
Package of measures to turnaround European performance, including sale of Go
British Airways today announced a 400 per cent lift in second quarter pre-tax profits, up from £40 million a year ago to £200 million this year - and outlined a series of steps to improve the group’s performance further still.
The three-month figures took the result for the half-year to September 30, 2000, to £150 million, well ahead of market expectations. Operating profit for the quarter rose 125 per cent to £264 million. The figure for the six months was to £361 million, up 71 per cent. Margins in the second quarter doubled to 10.3 per cent.
On the strength of this performance the Board is maintaining the interim dividend at 5.1 pence a share. Group turnover in the six months rose 4.9 per cent to £4,862 million on a flying programme down 3.3 per cent in terms of available seat kilometres.
Premium traffic rose 7.7 per cent, with product innovations like the flat beds in Club World winning significant extra market share. Yields in the second quarter showed the airline’s biggest ever year-on-year improvement, up 8.7 per cent
While the airline has hedged more than 80 per cent of its fuel for the current year, higher costs have impacted on profitability, accounting for an additional £61 million on a year ago in the second quarter, a 32 per cent rise. Despite this, efficiencies elsewhere contained overall unit costs to a marginal increase of just 0.8 per cent.
Rod Eddington, Chief Executive, said: “These are an encouraging set of results that show our strategy to improve performance is beginning to deliver results. But there are still challenges ahead.
“We are taking a ruthless approach towards poorly performing routes and assets. Those not adding value are being removed. It is imperative that each of our aircraft generates shareholder value. Meantime we are continuing to invest in products and services that will enhance customer loyalty and enable us to continue to support our average yield.”
Lord Marshall, the Chairman, said: “These figures demonstrate an excellent improvement, reflecting British Airways’ strengthening fundamentals and improving market conditions. Sharpening our focus on the more profitable parts of our business should continue this trend.”