Introduction summary of the headline figures
British Airways mainline scheduled Available Seat Kilometres (ASKs) in October grew by 0.6 per cent (although for the rest of the year capacity will reduce by around 1%). Traffic, measured in Revenue Passenger Kilometres (RPKs), fell by 0.2 per cent. Premium traffic rose 8.2 per cent, with Club World again the strongest driver. This is set against a 2.4% decline in premium traffic in October 1998. A second BA Popular Person offer has recently been launched to continue to drive premium traffic growth. Non-premium traffic was 1.7 per cent lower. Passenger load factor was 0.6 points lower at 72.0 per cent.

Market conditions
Although trading conditions remain highly competitive, these are encouraging figures. Yields continue to be under pressure, and there must be some caution around travel patterns for the Millennium period, when demand will be difficult to forecast.

Strategic developments
British Airways announced that it has placed an order for 12 new 100 seat Airbus 318s, with options to purchase 12 more aircraft. The move to the new, smaller A318 is a further step in the airline’s forward looking fleet strategy which will modernise the carrier’s fleet, increase average yields and reduce capacity.

The purchase of CityFlyer Express was completed after British Airways received approval from the Secretary of State for Trade and Industry, subject to undertakings which were offered by British Airways during the Competition Commission’s investigation of the transaction. There is no requirement for British Airways to divest slots. British Airways, its subsidiaries and franchisees now operate around 47% of the slots at London Gatwick.

British Airways and LanChile announced an agreement to co-operate further on air travel between the UK and Chile. Frequent flyer miles will be redeemable on each other’s services, with further exploration into codeshare opportunities. The new benefits will begin in June, shortly after which LanChile will join the oneworld alliance.

British Airways announced that it is to operate an additional three services between Heathrow and Lagos, Nigeria, in conjunction with Nigeria Airways. The airline currently operates a daily 747 400 from Gatwick to Lagos, and will now operate six services a week from Heathrow to Lagos in co-operation with Nigeria Airways.

Costs
Fuel prices were relatively steady through October, with jet kerosene currently trading at around $210 a tonne, compared to approximately $165 per tonne at the end of our first quarter. The level of fuel hedging for the balance of the financial year is approximately 85%.

The yen continued to strengthen against sterling. At the end of October, the value of the yen stood at Yen 173 to the pound, compared to Yen 175.70 at the end of September 1999.

Other highlights
In the United States, a US District Court Judge unconditionally dismissed all outstanding claims brought by Virgin Atlantic Airways against British Airways in the United States.

The British Airways Online Press Office has now gone live. All press releases for the year, including the traffic statistics commentary, are now available at http://www.britishairways.com/press.

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