British Airways Delivers Profit

London, Monday May 19, 2003: British Airways today posted a pre-tax profit of £135 million (2002: £200 million loss) for the full year to March 31, 2003. There was a pre-tax loss for the fourth quarter of £200 million (2002: £85million loss).

The operating profit for the full year was £295 million including an £84 million exceptional operating charge relating to Concorde. The operating loss for the fourth quarter was
£164 million, £119 million worse than last year.

Group turnover for the full year was £7,688 million, down 7.8 per cent on a flying programme 7.9 per cent smaller in available seat kilometres (ASKs). For the quarter, group turnover was down 14.2 per cent on a flying programme 3.6 per cent lower in ASKs. Revenue passenger kilometres were down 5.8 per cent for the full year and down by 7.1 per cent for the quarter. Seat factor was up 1.5 points to 71.9 per cent for the full year and down by 2.6 percentage points to 69.5 per cent in the quarter.

Excluding exceptional charges, total overall costs for the full year fell 11.9 per cent and unit costs improved by 5.6 per cent. Total costs were down 7.3 per cent for the quarter and unit costs improved by 4.5 per cent in the same period, excluding exceptional charges.
Operating cashflow for the full year was £1,185 million, up £319 million on last year. Cash inflow, before financing, was £1,231 million. Net debt fell by £1,145 million to
£5,149 million, its lowest level since September 1998, down £1.4 billion from the December 2001 peak.
The Future Size and Shape programme has exceeded targets in all areas including manpower costs, distribution, procurement and information technology.

The FRS17 accounting valuation will report a £1.2 billion deficit for the group pension schemes, in line with analysts’ expectations. An actuarial review will be completed later this year to determine changes to company contribution levels.


Rod Eddington, British Airways’ chief executive, said: “These are good results in one of the toughest years in living memory. Despite the war and SARS, our people have made a tremendous contribution in delivering all of our first year Future Size and Shape targets.
“However, we cannot be complacent. The timing of economic recovery is not clear. We must deliver further cost efficiencies in the coming year.”

Lord Marshall, British Airways’ chairman, said: “We expect the business environment will continue to be challenging in 2003/04 ahead of an economic recovery.

“Forecasting revenue against a backdrop of continuing global economic weakness, SARS, and Middle East developments is very difficult, however, the outlook is that revenue in quarter one will be lower than last year. Visibility beyond the first quarter is not clear.”
The board has recommended no final dividend.