As advised in last month`s release, mainline scheduled capacity growth, measured in Available Seat Kilometres (ASKs), slowed further. This is helpful for the airline in the present over-supplied markets worldwide. June ASKs grew by only 0.6 per cent (March +10.5 per cent, April +4.5 per cent, May +2.4 per cent).

June traffic, measured in Revenue Passenger Kilometres (RPKs) grew by 0.5 per cent with the premium traffic decline of 3.2 per cent, Club Europe continues to be the weaker performer. Growth in the non-premium cabins was 1.1 per cent. The passenger load factor was maintained at last June`s level of 75.3 per cent.

Cargo traffic on mainline scheduled services was 4 per cent lower, resulting in a 1.5 point decline in overall load factor to 69.6 per cent for mainline scheduled services.

For the three months to June 30, mainline ASK growth amounted to 2.4 per cent. Traffic volumes grew by 1.5 per cent. Premium traffic declined by 1.2 per cent with some growth in Club World volumes being offset by declines in other premium cabins. Non-premium traffic was up 2 per cent. Passenger load factor for the quarter of 70.2 per cent was 0.7 points lower than last year. As previously indicated, trading conditions remain challenging with excess industry capacity this summer continuing to induce significant discounting in the marketplace. The current year capacity growth plan of 0.6 per cent is being reviewed and will be reduced.

Highlights of the month

In line with British Airways strategy of reducing the rate of capacity growth, the airline announced that it is to terminate the lease on one Boeing 767-300 aircraft as permitted under the lease agreement.

British Airways entered into an agreement with Galileo International Inc under which British Airways has sold its wholly owned subsidiary, Britair Acquisition Corp. Inc., that indirectly held 7,000,400 common shares of Galileo International Inc. The net sales proceeds were US$307.7 million. At an exchange rate of U$1.60 =£1, the disposal realised a profit before tax of £149 million.

British Airways also sold its in-flight catering facility at London Gatwick to ALPHA Catering Services for a cash consideration of £14 million. In addition, ALPHA and British Airways have entered into new ten year service agreement for the continued supply by ALPHA of in-flight catering service at Gatwick and eight UK regional airports. The service agreement guarantees benefits to both parties.

The reciprocal frequent flyer arrangement between British Airways and JAL became effective from June 1 allowing members of each airline`s frequent frequent flyer programme to `earn and burn` on the other`s scheme. “Open skies” discussions between the UK and US Transport authorities that were due to restart in early July were once again postponed.

The Greek Transportation Ministry awarded a management contract to British Airways` independent consultancy division, Speedwing, for the turnaround of Olympic Airways and its preparation for possible privatisation. Covering an initial 30-month period, this represents one of the largest and most significant contracts of this kind yet placed in the world airline industry.

British Airways received the award for Best Investor Relations Website at the annual Investor Relations Magazine Awards ceremony. The website address is www.british-airways.com/investor.

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