British Airways today unveiled better-than-expected results, with the company’s business efficiency programme delivering £250 million of savings last year and on target to achieve £1 billion annually by the year 2000.

This underpinned pre-tax profit for 1997-98, at £580 million, just 9.4 per cent (£60 million) down on the previous year. For the final three months of the year, to March 31, pre-tax profit was £70 million, up nearly a quarter from £57 million a year ago.

The Board has recommended a final dividend of 11.9 pence a share to be paid on July 31 to shareholders registered on June 12. This will give a total of 16.6 pence a share for the full year, up 10.3 per cent on last year’s 15.05 pence per share. More than 80 per cent of employees, who are shareholders, will receive the dividend, and all eligible employees will be entitled to a profit-share bonus equal to half a week’s pay, totalling £16 million.

Despite the strength of sterling, which cost the company £200 million, operating profit remained strong at £504 million, slipping just £42 million on last year.

Sir Colin Marshall, Chairman, welcomed today’s results. He said: “The past year has seen British Airways make great progress, and the overall outlook for the company is favourable. The airline remains well positioned in a world industry that continues to offer substantial passenger and cargo growth. There is good growth in European markets. Fuel prices have fallen and sterling is dropping back from its recent peaks. This economic outlook will help offset the impact of any slowdown in the US and UK domestic economies and the current difficulties in the Far East.”

Bob Ayling, Chief Executive, said: “These results show the value of the business efficiency programme - which is expected to deliver some £1 billion in savings by the year 2000. This, combined with growth in all the main European markets, lower fuel prices and sterling dropping back from its recent peaks, puts the company in a strong position to maximise future growth.”

Bob Ayling continued: “British Airways has an innovative, skilled and dedicated workforce. We recognise the need for cost efficiencies and are focussing renewed energy on further improving products and customer service.

“Last week’s UK Government White Paper ‘Fairness at Work’ describes the need for Britain to aim high - high quality, high performance, high skills, high productivity, high value - if it is to succeed in the world market place. Nowhere is this more apparent than in the global airline industry.

“As the White Paper says, for some companies, market pressures, hierarchical management attitudes and short-term approaches to profit and costs can be obstacles. That is emphatically not the case at British Airways. We believe fairness at work and competitiveness can - and must - go hand in hand.”

The business efficiency programme is helping the airline carry out a £6 billion investment programme during the next three years, in new aircraft, improved services and growth. It is also enabling more employees to be recruited to improve service to customers. Savings have been made through pay standstills, voluntary severance, early retirement and improved working practices. Employees and trade unions worked in partnership with the airline to achieve these savings, while employee productivity improved strongly, up 6.3 per cent on the previous year although the airline’s workforce grew by 2.6 per cent.

The company`s annual general meeting will be held at the Barbican Centre, London, on
July 14, at 11 am. The full report and accounts or summary financial statement will be distributed to shareholders in the week beginning June 15 and from that time copies will be available to members of the public at the company`s registered office.

——-