1st Quarter Results
British Airways PLC
05 August 2005
FIRST QUARTER RESULTS 2005-2006 (unaudited)
OPERATING AND FINANCIAL STATISTICS (unaudited)
Three months ended
June 30 Better/
2005 2004 (Worse)
Revenue £m 2,059 1,902 8.3%
Profit before tax £m 124 75 65.3%
Profit after tax £m 90 43 nm
Net assets £m 1,783 1,028 73.4%
Basic earnings per share p 8.3 3.7 nm
nm: Not meaningful
Three months ended
June 30 Better/
2005 2004 (Worse)
TOTAL GROUP OPERATIONS
TRAFFIC AND CAPACITY
RPK (m) 27,768 27,083 2.5%
ASK (m) 36,706 36,150 1.5%
Passenger load factor (%) 75.6 74.9 0.7pts
CTK (m) 1,185 1,217 (2.6)%
RTK (m) 3,949 3,909 1.0%
ATK (m) 5,722 5,652 1.2%
Overall load factor (%) 69.0 69.2 (0.2)pts
Passengers carried (000) 9,177 9,288 (1.2)%
Tonnes of cargo carried (000) 193 216 (10.6)%
FINANCIAL
Operating profit (£m) 176 129 36.4%
Operating margin (%) 8.5 6.8 1.7pts
Passenger revenue per RPK (p) 6.09 6.00 1.5%
Passenger revenue per ASK (p) 4.60 4.50 2.2%
Cargo revenue per CTK (p) 9.96 9.70 2.7%
Total traffic revenue per RTK (p) 45.78 44.59 2.7%
Total traffic revenue per ATK (p) 31.60 30.84 2.5%
Net operating expenditure
per RTK (p) 41.33 41.29 (0.1)%
Net operating expenditure
per ATK (p) 28.52 28.56 0.1%
Average fuel price before hedging
(US cents/US gallon) 161.81 115.52 (40.1)%
TOTAL AIRLINE OPERATIONS (Note 1)
OPERATIONS
Average Manpower Equivalent (MPE) 46,079 46,280 0.4%
ATKs per MPE (000) 124.2 122.1 1.7%
Aircraft in service at
period end 287 290 (3)
Note 1: Excludes non airline activity companies, principally, Airmiles Travel
Promotions Ltd, BA Holidays Ltd, BA Travel Shops Ltd, Speedbird Insurance
Company Ltd and The London Eye Company Ltd.
CHAIRMAN'S STATEMENT
International Financial Reporting Standards
British Airways consolidated financial statements are now prepared under
International Financial Reporting Standards (IFRS). As permitted under IFRS 1,
the group decided to defer the adoption of IAS 39 and IAS 32 until April 1,
2005. As a consequence the comparative information for 2004/05 (published on
July 4, 2005) was prepared applying IFRS standards with the exception of IAS 32
and 39 - these standards are applied for the first time this quarter. (The basis
of preparation is detailed on page 8).
Group Performance
Group profit before tax for the three months to June 30 was £124 million; this
compares with a profit of £75 million last year.
Operating profit - - at £176 million - - was £47 million better than last year.
The improvement in operating profit primarily reflects an increase in passenger
revenue, partially offset by the increase in the cost of fuel net of fuel
surcharges and higher engineering and employment costs.
The operating margin was 8.5%, 1.7 points better than last year.
Cash inflow from operating activities was £349 million for the quarter, with
closing cash, cash equivalents and short term deposits at £1,936 million
representing a £254 million increase versus March 31. Net debt fell by £395
million from March 31, 2005 to £2,527 million.
Turnover
For the three month period, Group turnover - - at £2,059 million - - was up
8.3%, including passenger revenue up 4.0%. The flying programme was 1.2% larger
in ATKs. Passenger yield (pence per RPK) for the three months improved by 1.5%
compared with last year, largely driven by cabin mix; seat factor was up 0.7
points at a record 75.6% on capacity 1.5% higher in ASKs.
Cargo revenue was flat compared with last year, reflecting yields up 2.7%,
offset by reduced volumes (CTKs were down 2.6%).
Overall load factor was down 0.2 points at 69.0%.
Costs
For the quarter, group net unit costs (pence/ATK) improved by 0.1% on the same
period last year. This reflects the net cost increase of 1.1% on capacity 1.2%
higher in ATKs.
Total expenditure from operations was up by 6.2%. Fuel costs increased by 37.6%
due to increases in fuel price net of hedging partially offset by exchange;
engineering costs increased by 21.9% due primarily to the phasing of engine
inputs and costs for an additional cargo freighter; employee costs increased by
5.4% mainly reflecting wage awards and increased pension service costs, only
partially offset by manpower reductions. These increases were partially offset
by continued reductions in selling costs, down 21.7% due to agents' commission
restructuring and increased online sales.
Non Operating Items
Interest expense reduced by £7 million from last year to £59 million reflecting
the impact of lower debt. Interest income at £21 million was £3 million higher
than last year reflecting higher cash balances.
Retranslation of currency borrowings generated a charge of £9 million, (prior
year: £12 million credit), due to the retranslation of dollar and yen debt. The
retranslation - - a non-cash item required by standard accounting practice - -
results from the strengthening of the dollar and yen against sterling.
Loss on disposals of fixed assets and investments was £3 million.
Tax
The tax rate for the quarter was 27%, largely as a result of non-taxable income.
The company expects to return to a UK taxpaying position this year, and
accordingly we anticipate paying £50 million in Corporation tax in the current
year.
Earnings Per Share
The earnings attributable to shareholders for the three months was equivalent to
8.3 pence per share, compared with last year's earnings per share of 3.7 pence.
Net Debt / Total Capital Ratio
Borrowings, net of cash and short term loans and deposits, were £2,527 million
at June 30 - - down £395 million since the start of the year (partly due to the
conversion of the £112 million of bonds from debt to equity) and £4.1 billion
from the December 2001 peak. The net debt/total capital ratio reduced by 9.1
points from March 31 to 58.6%. The net debt/total capital ratio including
operating leases was 65.0%, a 7.4 point reduction from March 31. The reduction
in adjusted gearing is partly due to the conversion of the convertible capital
bonds from debt to equity (2.2 points) and partly due to the adoption of IAS 39
from April 1, 2005. The adoption of IAS 39 resulted in equity increasing by £183
million versus last year, and gearing reducing by 2.4 points.
Cash Flow
During the quarter we generated a positive cash flow from operating activities
of £349 million, £28 million higher than last year. Including current interest
bearing deposits, the cash position at June 30, 2005 was £1.9 billion, an
increase of £254 million compared with March 31, 2005.
Aircraft Fleet
During the quarter the Group fleet in service reduced by three to 287 aircraft,
following the sale of a BAe 146 and returns to lessors of a Boeing 737-500
aircraft and a de Havilland Canada DHC-8 aircraft.
Outlook
Record passenger loads in July indicate that the short term impact of the London
bombings was not material although it is too early to say what the long term
impact will be. When taken together with the uncertain economic outlook and
volatility in both fuel prices and the US Dollar exchange rate, accurate
forecasting is even more of a challenge than usual.
Market conditions, however, remain broadly unchanged.
The continuing strength of the US Dollar and increased surcharges have improved
the revenue outlook. We now expect total revenue for the year to March 2006 to
grow by 5.5 - 6.5%. Capacity and volume are still expected to increase by about
3% with total yield flat.
We now expect fuel costs, net of hedging, to be about £525 million more than
last year, a further increase of £75 million, largely driven by the stronger US
Dollar.
As announced in our latest Business Plan, our focus is on preparing for the move
to Terminal 5 in 2008, investing in products for our customers and continuing to
drive simplification to deliver a competitive cost base.
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. Information on some
factors which could result in material difference to the results is available in
the Company's SEC filings, including, without limitation the Company's Report on
Form 20-F for the year ended March 2005.
CONSOLIDATED INCOME STATEMENT (unaudited)
Three months ended
June 30 Better/
2005 £m 2004 £m (Worse)
Traffic Revenue
Passenger 1,690 1,625 4.0%
Cargo 118 118
1,808 1,743 3.7%
Other revenue 251 159 57.9%
TOTAL REVENUE 2,059 1,902 8.3%
Employee costs 570 541 (5.4)%
Depreciation and amortisation 178 178
Aircraft operating lease costs 25 26 3.8%
Fuel and oil costs 355 258 (37.6)%
Engineering and other
aircraft costs 117 96 (21.9)%
Landing fees and en route
charges 142 141 (0.7)%
Handling charges, catering and
other operating costs 234 233 (0.4)%
Selling costs 108 138 21.7%
Currency differences (5) (4) 25.0%
Accommodation, ground equipment
and IT costs 159 166 4.2%
TOTAL EXPENDITURE FROM OPERATIONS 1,883 1,773 (6.2)%
OPERATING PROFIT 176 129 36.4%
Fuel derivative gains* 1 nm
Interest expense (59) (66) 10.6%
Interest income 21 18 16.7%
Financing income and expense relating to pensions (4) (11) 63.6%
Retranslation (charges)/credits
on currency borrowings (9) 12 nm
Loss on sale of fixed assets
and investments (3) (3)
Share of losses in associates (1) (4) 75.0%
Income relating to fixed asset
investments 2 nm
PROFIT BEFORE TAX 124 75 65.3%
Tax (34) (32) (6.3)%
PROFIT AFTER TAX 90 43 nm
Attributable to:
Equity holders of the parent 90 43 nm
Minority interest
90 43 nm
Earnings per share:
Basic 8.3 3.7 nm
Fully diluted 7.9 3.7 nm
nm: Not meaningful
* Fuel derivative gains reflect the ineffective portion of unrealised gains and
losses on fuel derivative hedges required to be recognised through the income
statement under IAS 39.
CONSOLIDATED BALANCE SHEET (unaudited)
June 30 June 30 March 31
2005 £m 2004 £m 2005 £m
NON-CURRENT ASSETS
Property, plant and equipment
Fleet 6,843 7,108 6,944
Property 985 1,074 1,000
Equipment 378 468 385
8,206 8,650 8,329
Goodwill 72 72 72
Landing rights 121 94 122
Other intangible assets 55 12 60
Investments in associates 120 421 126
Long term investments 29 30 30
Available-for-sale financial assets 4
Employee benefit assets 137 131 137
Other financial assets 107 42 38
TOTAL NON-CURRENT ASSETS 8,851 9,452 8,914
NON-CURRENT ASSETS HELD FOR SALE 3 1 5
CURRENT ASSETS AND RECEIVABLES
Expendable spares and other inventories 86 73 84
Trade receivables 738 705 685
Other current assets 567 319 301
Other current interest bearing deposits 903 1,356 1,134
Cash and cash equivalents 1,033 379 548
1,936 1,735 1,682
TOTAL CURRENT ASSETS AND RECEIVABLES 3,327 2,832 2,752
TOTAL ASSETS 12,181 12,285 11,671
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Issued share capital 283 271 271
Treasury shares (24) (30) (26)
Other reserves 1,512 577 940
TOTAL SHAREHOLDERS' EQUITY 1,771 818 1,185
MINORITY INTEREST 12
TOTAL EQUITY 1,783
Equity minority interest 10 12
Non-equity minority interest 200 200
MINORITY INTERESTS 210 212
PROVISIONS
Employee benefit obligations 1,816 1,891 1,820
Provisions for deferred tax 906 745 816
Other provisions 41 39 34
TOTAL PROVISIONS 2,763 2,675 2,670
NON-CURRENT LIABILITIES
Interest bearing long-term borrowings 4,016 4,758 4,045
Convertible long-term borrowings 112
Other long term liabilities 304 327 306
TOTAL LONG-TERM LIABILITIES 4,320 5,197 4,351
CURRENT LIABILITIES
Current portion of long-term borrowings 447 689 447
Convertible long-term borrowings 112
Trade and other payables 2,811 2,688 2,658
Current tax payable 57 8 36
TOTAL CURRENT LIABILITIES 3,315 3,385 3,253
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 12,181 12,285 11,671
CONSOLIDATED CASHFLOW STATEMENT (unaudited)
Three months ended
June 30 Better/
2005 £m 2004 £m (Worse)
CASHFLOWS FROM OPERATING ACTIVITIES
Operating profit 176 129 47
Depreciation and amortisation 178 178
Operating cashflow before working capital changes 354 307 47
Increase in inventories and other receivables (66) (52) (14)
Increase in trade and other payables and provisions 111 115 (4)
Other non-cash movements 2 2
Cash generated from operations 401 372 29
Interest paid (48) (52) 4
Taxation (4) 1 (5)
NET CASHFLOW FROM OPERATING ACTIVITIES 349 321 28
CASHFLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (40) (51) 11
Purchase of interest in associated undertaking (3) 3
Proceeds from sale of property, plant and equipment 4 51 (47)
Costs of disposal of subsidiary undertakings (5) 5
Interest received 18 11 7
Dividends received 2 5 (3)
Decrease/(increase) in interest bearing deposits 233 (718) 951
NET CASH USED IN INVESTING ACTIVITIES 217 (710) 927
CASHFLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings (12) (23) 11
Payment of finance lease liabilities (69) (227) 158
Exercise of share options 1 1
Distributions made to holders of perpetual securities (3) (3)
NET CASH USED IN FINANCING ACTIVITIES (83) (253) 170
Net increase/(decrease) in cash and cash equivalents 483 (642) 1,125
Net foreign exchange difference 2 (6) 8
Cash and cash equivalents at March 31 548 1,027 (479)
CASH AND CASH EQUIVALENTS AT JUNE 30 1,033 379 654
These summary financial statements were approved by the Directors on August 4,
2005.
NOTES TO THE ACCOUNTS (unaudited)
For the period ended June 30, 2005
1 BASIS OF PREPARATION
These summary financial statements have been prepared in accordance with the
recognition and measurement criteria of International Financial Reporting
Standards (IFRS)* issued by the International Accounting Standards Board (IASB)
and with those of the Standing Interpretations issued by the International
Financial Reporting Interpretations Committee (IFRIC) of the IASB with the
exception of the disclosure requirements of IAS 34 - 'Interim Reporting'. The
accounting policies and basis of preparation differ from those set out in the
Report and Accounts for the year ended March 31, 2005 which were prepared in
accordance with United Kingdom accounting standards and the Companies Act 1985
(UK GAAP).
A summary of the significant accounting policies used in the preparation of
these financial statements under IFRS and a summary of the impact of the change
from UK GAAP to IFRS on comparative periods as required by IFRS 1 - 'First-time
adoption of International Financial Reporting Standards' were included in the
group's 'Release of financial information for 2004/05 under International
Financial Reporting Standards' published on July 4, 2005. The release included
the quarterly results for the quarters ended June 30, 2004, September 30, 2004,
December 31, 2004 and March 31, 2005 restated under the recognition and
measurement rules of IFRS and a summary of the significant differences to UK
GAAP. The release also included restated balance sheets at those dates in
addition to the restated balance sheet at April 1, 2004, the group's transition
date to IFRS.
As permitted under IFRS 1, the group elected to apply the requirements of IAS 32
- 'Financial Instruments - Disclosure and Presentation' and IAS 39 - 'Financial
Instruments - Recognition and Measurement' from April 1, 2005. As a consequence
certain assets and liabilities are required to be recognised and measured at
fair value. As a result of the application of IAS 39 the opening net assets of
the group increased by £183 million at April 1, 2005. The increase represents
the fair value of financial instruments and available for sale financial assets
(£193 million, net of deferred tax), partially offset by the impact of the
group's share of the opening reserves adjustments of associated undertakings
(£10 million). The adoption of IAS 32 had no impact on the reserves or net
assets of the group except for minor presentational differences between minority
interests and shareholders' equity.
Under IAS 39, financial instruments are recorded initially at fair value.
Subsequent measurement of those instruments at the balance sheet date reflects
the designation of the financial instrument.
Listed investments (other than interests in associates) are designated as
available-for-sale assets and are recorded at fair value. Any change in the fair
value is reported in reserves until the investment is sold when the cumulative
reserves movement is recognised in income. Any provisions for impairment of the
carrying value are reflected in income when they arise. Exchange gains and
losses on monetary items are taken to income unless the item has been designated
as a hedging instrument. Exchange gains and losses on non-monetary investments
are reflected in reserves until the investment is sold when the balance is
recognised in income.
Derivative financial instruments, comprising interest rate swap agreements,
foreign exchange derivatives and fuel hedging derivatives (including options,
swaps and collars) are measured at fair value on the group balance sheet.
Changes in the fair value are reported through operating income or financing
according to the nature of the derivative financial instrument unless the
derivative financial instrument has been designated as a hedge of a highly
probable expected future cashflow. Gains and losses on forward exchange
contracts to hedge capital expenditure commitments are recognised as part of the
total sterling carrying cost of the relevant tangible asset as the contracts
mature or are closed out. Gains and losses on derivative financial instruments
designated as hedging instruments that are expected to be highly effective at
inception and were highly effective for the period are taken to reserves and
reflected in the income statement when the cashflow either occurs or ceases to
be highly probable.
Certain loan repayment instalments denominated in US dollars and Japanese yen
are designated as hedges of highly probable future foreign currency revenues.
Exchange differences arising from the translation of these loan repayment
instalments are taken to reserves until the future revenue occurs when the
cumulative exchange difference is recognised in income.
The hedging relationships are tested for effectiveness in accordance with IAS 39
- 'Financial Instruments'.
Long term borrowings, finance leases and hire purchase agreements are recorded
at amortised cost. Certain leases contain interest rate swaps that are closely
related to the underlying financing and, as such, are not accounted for as an
embedded derivative. The carrying value of the interest rate swap is reflected
within the carrying value of the long term borrowing.
NOTES TO THE ACCOUNTS (unaudited) (Continued)
For the period ended June 30, 2005
BASIS OF PREPARATION (continued)
The financial information presented has been prepared on the basis of those
Standards and Interpretations of the International Financial Reporting
Interpretations Committee (IFRIC) and Standing Interpretations Committee (SIC)
that are expected to be applicable to 2005/06 financial reporting. These are
subject to ongoing review and endorsement by the European Commission, whilst the
application of the Standards continues to be subject to interpretation by IFRIC
as well as emerging industry consensus. As a consequence, further adjustments to
the accounting policies and treatments may need to be made in the first complete
set of IFRS financial statements for 2005/06 for the year ending March 31, 2006.
These financial statements have been prepared on a historical cost convention
except for certain financial assets and liabilities, including derivative
financial instruments and available-for-sale financial assets, that are measured
at fair value. The carrying value of recognised assets and liabilities that are
hedged are adjusted to record changes in the fair values attributable to the
risks that are being hedged.
* For the purposes of these statements IFRS also include International
Accounting Standards (IAS).
2 FINANCE COSTS / INCOME
Three months ended
June 30
2005 £m 2004 £m
INTEREST EXPENSE
Interest payable on bank and other loans and
finance charges payable under finance leases and
hire purchase contracts 59 66
Interest capitalised
Total interest costs 59 66
INTEREST INCOME
Bank interest receivable 21 18
Total interest income 21 18
FINANCING INCOME AND EXPENSE RELATING TO PENSIONS
Financing income and expense relating to pensions 4 11
Amortisation of actuarial (gains)/losses on pensions
Total financing income and expense relating to pensions 4 11
Retranslation on currency borrowings (9) 12
3 LOSS ON SALE OF FIXED ASSETS AND INVESTMENTS
Three months ended
June 30
2005 £m 2004 £m
Net loss on the disposal of property, plant and
equipment (3) (3)
(3) (3)
4 TAX
The tax charge for the quarter is £34 million, £12 million of which represents
deferred tax in the UK and £22 million represents current tax in the UK.
5 EARNINGS PER SHARE
Basic earnings per share for the quarter ended June 30, 2005 are calculated on a
weighted average of 1,080,074,000 ordinary shares (June 2004: 1,070,112,000;
March 2005: 1,071,126,000) as adjusted for shares held for the purposes of
employee share ownership plans including the Long Term Incentive Plan. Diluted
earnings per share for the quarter ended June 30, 2005 are calculated on a
weighted average of 1,128,239,000 ordinary shares (June 2004: 1,118,145,000;
March 2005: 1,126,485,000).
The number of shares in issue at June 30, 2005 was 1,130,882,000 (June 30, 2004:
1,082,903,000; March 31, 2005: 1,082,903,000) ordinary shares of 25 pence each.
NOTES TO THE ACCOUNTS (unaudited) (Continued)
For the period ended June 30, 2005
6 RECONCILIATION OF MOVEMENT IN NET DEBT TO CHANGES IN CASH FLOWS
Three months ended
June 30
2005 £m 2004 £m
Increase/(decrease) in cash and cash equivalents during the period 483 (642)
Net cash used in repayment of long-term borrowings 81 250
(Reduction)/increase in interest bearing deposits (233) 718
Change in net debt resulting from cash flows 331 326
New finance leases taken out and hire
purchase arrangements made (2) (3)
Conversion of Convertible Capital Bonds 2005 112
Exchange movements (46) 11
Movement in net debt during the period 395 334
Net debt at April 1 (2,922) (4,158)
Net debt at period end (2,527) (3,824)
Net debt comprises the current and non-current portions of long-term borrowings,
convertible long-term borrowings and overdrafts, less cash and cash equivalents
plus interest-bearing short-term deposits.
7 ANALYSIS OF LONG-TERM BORROWINGS
June 30 June 30 March 31
2005 £m 2004 £m 2005 £m
Interest bearing long-term borrowings comprise:
Loans 1,102 1,103 1,105
Finance Leases 1,488 1,938 1,493
Hire purchase arrangements 1,426 1,717 1,447
4,016 4,758 4,045
Current portion of long-term borrowings comprise:
Loans 62 100 63
Finance Leases 100 137 96
Hire purchase arrangements 285 452 288
447 689 447
8 RESERVES
June 30 June 30 March 31
2005 £m 2004 £m 2005 £m
Balance at April 1 940 557 557
Transitional effects from the adoption of IAS 39 and IAS 32 383
Profit for the period 90 43 392
Distributions to perpetual preferred security holders (3) (3) (14)
Conversion of Convertible Capital Bonds 2005 100
Exchange and other movements 2 (20) 5
1,512 577 940
9 The figures for the three months ended June 30, 2005 and 2004 are unaudited
and do not constitute full accounts within the meaning of Section 240 of the
Companies Act 1985. The financial statements for the year ended March 31, 2005
have been delivered to the Registrar of Companies and on which the auditors have
issued an unqualified audit report and did not contain a statement under Section
237 of the Companies Act 1985.
INDEPENDENT REVIEW REPORT TO BRITISH AIRWAYS Plc
Introduction
We have been instructed by the Company to review the financial information for
the three months ended June 30, 2005, which comprises the Consolidated Income
Statement, Consolidated Balance Sheet, Consolidated Cash Flow Statement and
Notes to the Accounts. We have read the other information contained in the first
quarter results and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
This report is made solely to the Company in accordance with guidance contained
in Bulletin 1999/4 'Review of Interim Financial Information' issued by the
Auditing Practices Board. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company, for our work,
for this report, or for the conclusions we have formed.
Directors' responsibilities
The first quarter results, including the financial information contained
therein, is the responsibility of, and has been approved by the directors. The
directors are responsible for preparing the interim report in accordance with
the Listing Rules of the Financial Services Authority.
As disclosed in note 1, the next annual financial statements of the Group will
be prepared in accordance with those IFRSs adopted for use by the European
Union.
The accounting policies are consistent with those that the directors intend to
use in the next financial statements. There is, however, a possibility that the
directors may determine that some changes to these policies are necessary when
preparing the full annual financial statements for the first time in accordance
with those IFRS adopted for use by the European Union.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
'Review of interim financial information' issued by the Auditing Practices Board
for use in the United Kingdom. A review consists principally of making
enquiries of Group management and applying analytical procedures to the
financial information and underlying financial data, and based thereon,
assessing whether the accounting policies have been applied. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit.
Accordingly we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the three months
ended June 30, 2005.
Ernst & Young LLP
London
August 4, 2005
UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (US GAAP) INFORMATION
(unaudited and for information only)
The accounts have been prepared in accordance with the measurement and
recognition requirements of International Financial Reporting Standards (IFRS)
that differ in certain respects from those generally accepted in the United
States.
The group has restated the comparatives to recognise the adoption of IFRS.
The adjusted net income and shareholders' equity applying US GAAP are set out
below:
Three months ended
June 30
2005 £m 2004 £m
Profit for the period as reported in the
Group profit and loss account 90 43
US GAAP adjustments (59) 15
Net income as so adjusted to
accord with US GAAP 31 58
Net income per Ordinary Share
as so adjusted
Basic 2.9p 5.4p
Diluted 2.7p 5.4p
Net income per American Depositary Share
as so adjusted
Basic 29p 54p
Diluted 27p 54p
June 30 March 31
2005 £m 2004 £m 2005 £m
Shareholders' equity and minority interests as
reported in the Group balance sheet 1,783 1,028 1,397
US GAAP adjustments 530 980 766
Shareholders' equity and minority interests as so
adjusted to accord with US GAAP 2,313 2,008 2,163
AIRCRAFT FLEET
(unaudited and for information only)
Number in service with Group companies at June 30, 2005
On Balance Off Balance Changes
Sheet Sheet Total Since Future
Aircraft Aircraft June 2005 March 2005 deliveries Options
AIRLINE OPERATIONS (Note 1)
Boeing 747-400 57 57
Boeing 777 40 3 43
Boeing 767-300 21 21
Boeing 757-200 13 13
Airbus A319 (Note 2) 21 12 33 3 45
Airbus A320 (Note 3) 9 17 26 3
Airbus A321 6 6 1
Boeing 737-300 5 5
Boeing 737-400 (Note 4) 18 18
Boeing 737-500 9 9 (1)
Turboprops (Note 5) 8 8 (1)
Embraer RJ145 16 12 28
Avro RJ100 16 16
British Aerospace 146 4 4 (1)
GROUP TOTAL 205 82 287 (3) 7 45
Notes:
1. Includes those operated by British Airways Plc and British Airways
CitiExpress Ltd.
2. Certain future deliveries and options include reserved delivery positions,
and may be taken as any A320 family aircraft.
3. Excludes 1 Airbus 320 sub-leased to GB Airways.
4. Excludes 2 Boeing 737-400s sub-leased to Air One.
5. Comprises 8 de Havilland Canada DHC-8s. Excludes 5 British Aerospace ATPs
stood down pending return to lessor and 12 Jetstream 41s sub-leased to
Eastern Airways.
This information is provided by RNS
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