3rd Quarter Results

British Airways PLC
10 February 2003

COST PERFORMANCE DRIVES PROFIT

  • Q3 pre-tax profit of £25 million
  • Operating profit of £53 million for the quarter
  • Unit costs down 9.4 per cent
  • Debt down £1.4 billion from its peak
  • Headcount down by 9,209 against 10,000 target

London, Monday February 10, 2003: British Airways today reported a pre-tax
profit of £25 million for the three months to December 31, 2002 against a 
pre-tax loss of £160 million for the same period last year.

The three month pre-tax figures took the results for the nine months to a profit
of £335 million, (2001: £115 million loss).

Operating profit for the quarter was £53 million, (2001: £187 million loss). For
the nine months, operating profit was £459 million (2001: £65 million loss).

Unit costs improved for the fourth consecutive quarter and were down by 9.4 per
cent on the same period last year. This reflects a net cost reduction of 10.8
per cent on capacity which was 1.6 per cent lower in ATKs.

Borrowings, net of cash, short term loans and deposits, were £5,186 million at

December 31, down £1.4 billion from the December 2001 peak.

Manpower reductions since August 2001 total 9,209 and are on track to achieve
10,000 by March 2003 and 13,000 by March 2004.

Group turnover for the third quarter at £1,857 million was up 1.0 per cent on a
flying programme 1.6 per cent smaller as measured in ATKs. Passenger yield,
measured in RPKs, in the third quarter was down 4.5 per cent (2001: up 0.3 per 
cent). Seat factor for the quarter was up 5.7 points at 70.9 per cent on 
capacity which was 1.8 per cent lower in ASKs.

Cargo volumes for the quarter were up 11.4 per cent compared with last year,
with yields down 5.0 per cent as measured in CTKs. Passenger and cargo capacity,
measured in ATKs, was up 5.5 points at 67 per cent. For the nine months, overall
load factor was up 3.8 points to 67.3 per cent.

Rod Eddington, Chief Executive, said: 'One year on, our Future Size and Shape
programme of cost control and simplification continues to make us a leaner,
fitter and more competitive airline. Our total costs in the last 12 months are
£1 billion lower than the previous year which demonstrates the determination of
our people to deliver.

'We have restructured our European shorthaul business and the new, lower, year
round fares are now available on almost 180 routes with more customers than ever
before booking via the net. UK on-line bookings continue to exceed all targets
with 37 per cent of the new fares being booked on ba.com.'

Lord Marshall, Chairman, said: 'In the absence of hostilities in the Middle
East, we expect this financial year to be profitable. We expect the business
environment to be tougher in 2003 than last year. Forecasting revenue against
the backdrop of the threat of war, increasing competitive pressure and uncertain
economic outlook is difficult, but at this stage we anticipate no revenue growth
over the next 12 months.

'Our focus remains on managing our controllable costs. The implementation of our
Future Size and Shape programme is on track and delivering more than the
expected cost savings.

'Business restructuring, in particular cost cutting and cash conservation, have
left the company well positioned for the uncertain markets that lie ahead.'

                                     -ends-

                          February 10, 2003 011KG/2003


Notes to Editors:

Q3: October - December 2002 strategic developments

  • Manpower reductions since August 2001 total 9,209 and are on track to
    achieve 10,000 by March 2003 and 13,000 by March 2004.

  • Pilots' pay and re-structuring deal agreed until January 2004, marking the
    end of 2002 pay agreements for all staff groups.
  • Achieved £442 million of annualised cost savings against target of £450
    million by March 2003.
  • Services from London City airport to be launched in April 2003 to
    Frankfurt, Glasgow and Paris by British Airways CitiExpress.
  • British Airways CitiExpress move to all jet operation and withdraw from 21
    UK regional routes.
  • British Airways and Iberia began parallel codesharing on trunk routes from
    Heathrow to Madrid and Barcelona.
  • British Airways and American Airlines filed for regulatory approval to
    apply their flight codes on each others services, excluding transatlantic
    routes, between the US and London.
  • SN Brussels Airline code on all BA flights between Gatwick, Heathrow and
    Brussels and on British Airways CitiExpress services between Birmingham and
    Brussels.

  • The summer 2003 schedule includes seven extra flights to Chicago from
    Heathrow per week, five extra to Newark, New York, three extra to Toronto
    and three extra between Gatwick and Houston. Heathrow to Melbourne via
    Singapore flights go daily from five a week. Heathrow to Rio de Janeiro via
    Sao Paulo reduce to four flights per week and Buenos Aires, will fly via Sao
    Paulo.

  • The new shorthaul pricing model is now available on almost 180 routes.

  • Completed disposal of two Boeing 757-200s and one Boeing 737-400.

A webcast of British Airways' conference call to city analysts can be accessed
via the internet www.bashares.com - on Monday, February 10 at 2pm.

Certain information included in this statement 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 'Future Size and Shape' programme, 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 itemise 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 2002.


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