Fuel prices cause misery for British Airways

British Airways have reported a dramatic drop in profits in the latest trading figures - £75 million, compared to £125 million in the same period last year.

British Airways Chief Executive, Rod Eddington attributed the fall in profits to rising fuel costs, which he said had increased by £106 million (47.3%). Mr Eddington said that the quarter's fuel prices were "respectable" in view of the rising costs and added: "Our focus remains on reducing controllable costs and debt whilst continuing to invest in our products. For example, we have taken delivery of six Airbus A321 aircaft and next month we will start further improvements to our Club World flat beds."

The group turnover for the quarter was up 4.3% at £1,973, on a flying programme 2.1% larger, which reflected the impact of fuel surcharges and an increase in cargo revenue of 6.3%, with passenger revenue declining by 0.1%. Passenger yields were also down 1.9%.

The company also reported that operating expenditure had increased by 6.3% during the quarter, influenced primarily by the increasing fuel costs, but also by rising employee costs, which increased by 3.2%. Selling costs continued to reduce – down 10.2% in the quarter – which was attributed to lower commission payments to travel agents and growth in online bookings.

Cargo volumes for the quarter increased by 8.1% compared with last year's figures, although yields decreased by 1.6%.

Overall, load factor for the quarter increased by 1.2 points to 69.9%, while operating margins for the quarter fell by 1.7 points to 5.6% from the same period last year.

British Airways Chairman, Martin Broughton, said: "Market conditions for the current financial year remain broadly unchanged. For the year to March 2005, the total revenue outlook is slightly better than previous guidance, with a 3.0 to 3.5% improvement anticipated.

"All market segments remain price sensitive and yield declines are expected to continue. Fuel costs net of hedging are still expected to be about £245 million more than last year. Passenger and cargo fuel surcharges partially offset this increase."

(KMcA/SP)