In July 2003, overall load factor fell 2.2 points to 67.9 per cent. Passenger capacity, measured in Available Seat Kilometres, was 3.0 per cent above July 2002 and traffic, measured in Revenue Passenger Kilometres, was higher by 2.5 per cent. This resulted in a passenger load factor down 0.3 points versus last year, to 76.4 per cent. The increase in traffic comprised a 1.7 per cent reduction in premium traffic and a 3.2 per cent increase in non-premium traffic. The statistics are distorted by the unofficial strike action which occurred during the month and has impacted both Available Seat Kilometres and Revenue Passenger Kilometres by some 2 percentage points. Cargo, measured in Cargo Tonne Kilometres, fell by 7.8 per cent affected by both the strike action and the temporary closure of the Ascentis World Cargo Centre for maintenance work.
Market conditions are broadly unchanged from last month, the outlook still fragile with traffic volumes remaining very sensitive to yield. Seat factors are expected to continue at close to last year’s levels. We expect that revenue in the second quarter will be lower than last year.
British Airways posted a pre-tax loss of £45 million (2002: £65 million profit) for the first quarter to June 30, 2003. The operating profit for the first quarter was £40 million (2002: £158 million profit). The deterioration in operating profit reflects the significant reduction in revenue due to continuing economic weakness, the war in Iraq and the impact of SARS. This was partially offset by cost savings delivered through the airline’s Future Size and Shape recovery programme.
British Airways announced that the airline had reached agreement with staff over the introduction of its electronic swiping in and out system and that the trades unions concerned had agreed to remove the threat of industrial action. The direct cost of the unofficial industrial action will be in the range £30 million to £40 million reflecting costs incurred and lost revenue.
British Airways announced its route schedule for the winter 2003 season. The new schedule reflects the airline’s strategy of focusing on more profitable routes. The network changes, which start on October 26, 2003 unless specified, are:
* A new service from London Gatwick to Turin which will operate on a daily basis until December, 2003, when a twice daily service commences. In addition, from April, 2004, there will be a new service from London Gatwick to Dubrovnik in Croatia which will operate three times each week.
* A new twice daily service from Manchester to Copenhagen, operated by British Airways CitiExpress.
* Additional frequencies from London Gatwick to the Caribbean commencing in December 2003. Flights to Antigua will increase from seven to 10 each week and flights to Barbados will increase from eight to 10 each week.
* Flights to Bilbao in Spain will switch from London Gatwick to London Heathrow.
* Services from London Gatwick to Bremen and Brussels will be suspended from September 1, 2003, and the service between London Gatwick and Dusseldorf will be suspended from October 1, 2003. The service between London Heathrow and Zagreb in Croatia will be suspended from September 14, 2003, and the service between London Heathrow and San Diego will be suspended from October 26, 2003