Savings Drive £385 Million Half-Year Profits

British Airways today unveiled pre-tax profits of £385 million for the first six months, to September 30, 1998, up from £273 million for the same period last year, excluding one-off benefits from disposals.


Operating margin improved by 1.6 percentage points over the period, to 9.2 per cent.


Earnings per share were up 7.1 per cent at 33.2 pence. The interim dividend payable to shareholders is being raised by 8.5 per cent to 5.10 pence a share.


With the weakening economic outlook in the UK and beyond, as anticipated, the company has seen a reduction in unit yields. This trend has been offset by the benefits from on-going cost efficiencies achieved by the business efficiency programme (BEP) which is ahead of plan and now targeted to achieve cumulative savings of £600 million a year by the end of this financial year.


As the BEP continues, British Airways is taking additional determined steps to ensure that the airline is well placed to increase further its competitiveness. It is reducing capacity growth next year to 2 per cent and, in the longer term, it has increased flexibility by rationalising its forward fleet orders to provide more aircraft that offer fewer economy seats and are more capital efficient.

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More than 24 million passengers flew with British Airways during the past six months, equivalent to some 130,000 people a day.


Lord Marshall, Chairman, said: “Today’s results show how the company has benefitted from its clear understanding of the key trends in the international airline market. Despite current global economic uncertainties we are taking the necessary steps to ensure that we are in a flexible position to meet further challenges.”


Bob Ayling, Chief Executive, said: “We are in very good shape to respond to future market conditions. We have taken immediate steps both to supplement our business efficiency programme, which is well on target to reach its £1 billion of annualised savings by the year 2000, and to reduce significantly capacity growth. In the longer term we are refining our fleet to absorb less capital, improve yields, and to enhance flexibility.”


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