1st Quarter Results

British Airways PLC
03 August 2007


INTERIM MANAGEMENT STATEMENT

Period April 1, 2007 - June 30, 2007 (Unaudited)

PROFITS UP ON GOOD RESULTS

British Airways today (August 3) presented its interim management statement for
the quarter ended June 30, 2007.

Period highlights:

•          Operating profit of £263 million (2006: £206 million)
•          Operating margin of 12 per cent (2006: 9.2 per cent)
•          Profit before tax of £289 million (2006: £191 million)
•          Revenue excluding exchange level with last year
•          Strong cost performance
•          Increased resources to address Heathrow operational issues
•          Pay and working practices agreed
•          Non-stop direct US Europe flights approved


British Airways' chief executive Willie Walsh, said:

'These are very good results despite operational difficulties at Heathrow.
Profits are up as a result of the steps we took last year to control costs and
strengthen our business.

'Revenue is flat before exchange and reflects the continued impact of security
and baggage restrictions on shorthaul and premium transfer traffic, which
Heathrow has been struggling to cope with.

'We appreciate how frustrating this has been for our customers and I am pleased
the Government has also recognised this and set up a working group to see how
quickly the restrictions on hand baggage can be eased. In order for the
Government to remove the restrictions, the BAA must recruit additional personnel
and invest in the right equipment so we can get back to offering good customer
service.

'In the meantime we have taken all available steps to minimise inconvenience to
our customers and have increased manpower levels in the terminals at Heathrow to
an all time high.

'The opening of Terminal 5 is now just 236 days away and on September 17 BAA
hands over the terminal to us. Trials with staff and 2,000 members of the public
on all aspects of the new facility start in November.

'I am delighted that ahead of our move we have agreed working practice changes
with all our Heathrow customer service and operational staff and a two year pay
deal with all our trade union groups which takes us through to 2009.

'Our operating margin for the quarter is 12 per cent and our target of a 10
percent operating margin for the year remains.'

Financial review:

Revenue excluding exchange was flat.

Passenger revenue fell to £1,899 million on a flying programme 0.3 per cent
bigger measured in available seat kilometres (ASKs). Traffic measured in revenue
passenger kilometres (RPKs) fell by 1.9 per cent delivering seat factors down to
76.8 per cent. Yields were flat year on year with price and mix benefits offset
by exchange.

Demand for First and Club World remains strong and traffic was up 0.1 per cent
despite a very strong performance in the same period last year and the impact of
the baggage and security restrictions on premium transfer traffic. However,
traffic in non-premium cabins fell in the quarter by 2.3 per cent driven by the
North Atlantic and domestic routes where the increase in air passenger duty tax
has dampened demand most significantly. The weakness of the dollar has also
affected our US business.

Cargo revenue fell to £146 million due to exchange, reductions in capacity of
5.2 per cent and operational disruptions.

Our cost performance was strong and benefited from the weak US dollar.  Employee
costs fell by 8.3% to £542 million largely because of the changes to the NAPS
pension scheme and severance costs which together were some £50 million lower
than last year. Fuel fell 5.2 per cent to £473 million mainly because of
favourable exchange. Selling costs were down £15 million in the quarter due to
lower agency commissions and passenger numbers.  Unit costs in the period were
down 3.9 per cent on an ATK reduction of 1.6 per cent.

The profit before tax of £289 million benefited from financing income from
pensions following the company's one-off contribution to the pension scheme and
a reduction in provisions for aircraft end of lease guarantees.

The financial position of the company remains strong.  This is reflected by the
Standard and Poors upgrade of the company's credit rating to investment grade
that will support our investment programme.  Our cash position continues strong
at a healthy £1,954 million despite a one-off payment of £560 million into the
company's pension scheme. This had an impact on net debt, which was up from year
end to £1,246 million.  The cash outflow from operating activities in the period
was £172 million, £647 million worse than last year reflecting the £560 million
pension payment and working capital movements.  Capital expenditure in the
period was higher than last year at £163 million, reflecting delivery of one new
Airbus 321 and spend on our new club world cabin and Terminal 5.

The tax rate in the period was just 6 per cent benefiting from a one-off credit
arising from the reduced corporation tax rate effective from April 1, 2008.

Business issues

Terminal 5

BAA formally hands over the Terminal in September and we will begin a parallel
operation with staff and members of the public, testing every aspect of the
facility. Customer facilities will be better than any other hub in Europe.
Terminal 5 offers unparalleled standards of passenger comfort and convenience.

Customer developments

Our new Club World cabin has been a huge success and customer satisfaction
levels are high. We are fitting aircraft at the rate of one per week and have
completed more than half the Boeing 747 fleet.  The new cabin is flying on 96
services per week to New York.

We are introducing six more languages onto ba.com including Japanese, Swedish,
Portuguese, Chinese, Polish and Hungarian.  Ba.com currently offers five core
languages: English, French, Spanish, Italian and German.

Environment

Climate change continues to be at the top of the public and political agenda and
it is one of our key priorities.  Aviation must play its full part in containing
and ultimately neutralising CO2 emissions.

We know this issue is of concern to our customers and we will be re-developing
our carbon offset scheme to make it more user-friendly and give us more choice
over the emissions reducing projects it will finance. We have also created a new
position, Head of Corporate Social Responsibility.

We set ourselves a target of improving fuel efficiency by 30 per cent by 2010,
compared with 1990. By the end of last year, we had achieved a 28 per cent
improvement. We have now set a new target for a further improvement of 25 per
cent by 2025, compared with 2005.

Open skies

Our plans to launch non-stop direct services between the United States and
Europe have been approved by the US DoT and we are looking forward to the
opportunity this gives us to build on our established brand and deep roots in
the US and Europe.

Our Dallas and Houston services, which we currently operate from Gatwick, will
also benefit from the 'open skies' agreement.  They will be moved to Heathrow
from next March.  They will benefit from the stronger feeder traffic at our main
base and better serve the oil and gas industries.  We have planned for open
skies for many years now and we are ready to take up the opportunity it offers.

Fleet

We have taken the first steps towards a single short-haul fleet across our
mainline network with the order of eight new Airbus A320 family aircraft powered
by IAE engines.  We are also near to a decision on a major order for replacement
and growth longhaul aircraft.

Iberia

We have joined with a consortium led by TPG to look at a potential bid for
Iberia and are currently involved in due diligence.

Investigations

We announced that we have agreed a resolution with the UK Office of Fair Trading
(OFT) and entered into a plea agreement with the United States Department of
Justice  (DoJ) on fines relating to anti-competitive activity in the company's
longhaul passenger surcharges and cargo business.

Under the terms of the agreements, we have agreed to pay a fine of £121.5
million to the OFT and  $300 million (£145 million) to the DoJ for infringements
of competition laws. The sum of the combined fine is consistent with our
guidance and provision of £350 million.

This resolves the OFT's and the DoJ's investigation of British Airways.

Trading Outlook

Turning now to the outlook.  As the Heathrow terminals continue to operate above
capacity this will affect our ability to recover quickly from any unexpected
events.  Combined with the continued weakness of the US dollar our revenue
guidance is reduced by 1 per cent to around 4 per cent to reflect these risks.

Our revised cost guidance year on year is flat, excluding fuel, reflecting both
expected exchange benefits from the weaker dollar and strong performance in the
first quarter.

Fuel costs are now expected to be up £120 million on last year, £20 million
worse than our previous guidance.

                                      ends


Note to Editors:

This is the first Interim Management Statement that British Airways has released
under the European Union Transparency Directive.  The new rules apply for all
accounting periods beginning on or after January 20, 2007.  The new rules
combined with our application for deregistration from the Securities and
Exchange Commission (SEC), have provided the Company with an opportunity to
review its quarterly financial reporting requirements. The Interim Management
Report that will be provided for the Interim Results in November, will include
financial statements.

In addition there will be a webcast of an analyst conference call and slide
presentation at 2pm (BST) available through our website www.bashares.com.

                                                                        Appendix

Financial Position and Performance for the three months ended June 30, 2007
Continuing Operations (Unaudited)

                                                        Three months ended June 30
                                                          2007                2006               Change
                                                                          Restated

Passenger revenue                    £m                  1,899               1,936               (1.9)%

Cargo revenue                        £m                    146                 165              (11.5)%

Other revenue                        £m                    148                 146                 1.4%

Revenue                              £m                  2,193               2,247               (2.4)%

Operating profit                     £m                    263                 206                27.7%

Profit before tax                    £m                    289                 191                51.3%

(Loss)/profit from discontinued      £m                    (3)                   4                   nm
operations

Tax                                  £m                   (17)                (41)                58.5%

Profit after tax                     £m                    269                 154                74.7%

Basic earnings per share             P                    23.4                12.9                81.4%

EBITDAR                              £m                    502                 437                   65

Net assets                           £m                  2,712               2,349                15.5%

Net debt                             £m                (1,246)             (1,149)                 (97)

Cash                                 £m                  1,954               2,776                (822)

Cash (out)/in from operating         £m                  (172)                 475                (647)
activities


Certain information included in these statements is forward-looking and involves
risks and uncertainties that could cause actual results to differ materially
from those expressed or implied by the forward looking statements.

Forward-looking statements include, without limitation, projections relating to
results of operations and financial conditions and the Company's plans and
objectives for future operations, including, without limitation, discussions of
the Company's Business Plan programs, expected future revenues, financing plans
and expected expenditures and divestments. All forward-looking statements in
this report are based upon information known to the Company on the date of this
report. The Company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future events
or otherwise.

It is not reasonably possible to itemize all of the many factors and specific
events that could cause the Company's forward looking statements to be incorrect
or that could otherwise have a material adverse effect on the future operations
or results of an airline operating in the global economy.




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