British Airways today (Monday August 9) unveiled pre-tax profits of £200 million (Q1 1998: £145 million) for the three months to June 30, 1999 in line with market expectations.
Group turnover for the three-month period was down 2.5 per cent, at £2,222 million, on a flying programme 4.3 per cent larger in available tonne kilometres (ATKs). The general economic environment, coupled with relatively weak demand in the premium passenger market and industry-wide price discounting, produced an operating profit of £94 million (1998: £173 million).
Profits on disposals for the period were £177 million, derived primarily from the disposal of the airline`s interest in Galileo International Inc.
The carrier`s Business Efficiency Programme (BEP) continues to deliver strong results, with savings reaching £750 million last year and £1 billion by 2000/2001. The BEP has also fed through to unit costs which fell 2.9 per cent, compared to the same period last year. Productivity for the period was up 0.7 per cent.
British Airways remains committed to offering the best possible service to its passengers and is investing more than £6 billion to improve significantly every single product. Concorde is to undergo a major refurbishment as the British Airways` flagship for the 21st Century. A complete redesign of Concorde`s interior and a new dedicated lounge at Heathrow are all part of the planned investment.
British Airways` route refinements will complement the fleet changes. They will involve increasing the frequency of services on profitable routes attractive to business customers while cutting back services on under-performing routes which are currently over-serviced, such as Jakarta and Pittsburgh.
In line with British Airways` strategy to restrain mainline scheduled capacity growth, the company will grow capacity by less than 0.6 per cent in the current year and reduce capacity by up to 12 per cent over the next three years.
Bob Ayling, British Airways Chief Executive, said: “We are ahead of the competition in a number of areas. We said we would deliver on costs and we continue to do just that. Our strategy of reducing capacity is ahead of target and through our fleet and network changes, British Airways will emerge from current market conditions with lower costs and a young aircraft fleet focused on the most profitable sections of the market.”
Lord Marshall, Chairman, said: “We look forward to a strengthening performance in the medium-term as we continue to adapt well to changing market conditions. In the current year, British Airways is investing to stay ahead of the competition and lead the world`s airline industry with the introduction of innovative new products and services.”