Final Results - press release

British Airways PLC
19 May 2003



STRONG COST PERFORMANCE DELIVERS FULL YEAR PROFIT

  • Pre-tax profit of £135m for the full year
  • Operating profit of £295m for the full year
  • Operating cash flow of £1,185m for the full year
  • Pre-tax loss for the quarter of £200m
  • Operating loss for the quarter of £80m (excluding exceptional charges)
  • Total costs down 7.3 per cent and unit costs improve 4.5 per cent for the
    quarter (excluding exceptional charges)
  • Net debt reduced by £1,145m for the year

London, Monday May 19, 2003: British Airways today posted a pre-tax profit of
£135 million (2002: £200 million loss) for the full year to March 31, 2003.
There was a pre-tax loss for the fourth quarter of £200 million (2002:
£85million loss).

The operating profit for the full year was £295 million including an £84 million
exceptional operating charge relating to Concorde. The operating loss for the
fourth quarter was

£164 million, £119 million worse than last year.

Group turnover for the full year was £7,688 million down, 7.8 per cent on a
flying programme 7.9 per cent smaller in available seat kilometres (ASKs). For
the quarter, group turnover was down 14.2 per cent on a flying programme 3.6 per
cent lower in ASKs. Revenue passenger kilometres were down 5.8 per cent for the
full year and down by 7.1 per cent for the quarter. Seat factor was up 1.5
points to 71.9 per cent for the full year and down by 2.6 percentage points to
69.5 per cent in the quarter.

Total overall costs for the full year fell 11.9 per cent, excluding exceptional
charges. Total costs were down 7.3 per cent for the quarter and unit costs
improved by 4.5 per cent in the same period, excluding exceptional charges.

Operating cashflow for the full year was £1,185 million, up £319 million on last
year. Cash inflow, before financing, was £1,231 million. Net debt fell by £1,145
million to

£5,149 million, its lowest level since September 1998, down £1.4 billion from
the December 2001 peak.

The Future Size and Shape programme has exceeded targets in all areas including
manpower costs, distribution, procurement and information technology.

The FRS17 accounting valuation will report a £1.2 billion deficit for the group
pension schemes, in line with analysts' expectations. An actuarial review will
be completed later this year to determine changes to company contribution
levels.

Rod Eddington, British Airways' chief executive, said: 'These are good results
in one of the toughest years in living memory. Despite the war and SARS, our
people have made a tremendous contribution in delivering all of our first year
Future Size and Shape targets.

'However, we cannot be complacent. The timing of economic recovery is not clear.
We must deliver further cost efficiencies in the coming year.'

Lord Marshall, British Airways' chairman, said: 'We expect the business
environment will continue to be challenging in 2003/04 ahead of an economic
recovery.

'Forecasting revenue against a backdrop of continuing global economic weakness,
SARS, and Middle East developments is very difficult, however, the outlook is
that revenue in quarter one will be lower than last year. Visibility beyond the
first quarter is not clear.'

The board has recommended no final dividend.

                                     -ends-

19 May, 2003 KG/057/03

Notes to Editors:

Future Size and Shape achievements

  • Manpower reductions since August 2001 total 10,182 and are on track to
    achieve 13,000 by September 2003.
  • Achieved £570 million of annualised cost savings against target of £450
    million.
  • European losses reduced from £244 million to £117 million.
  • 41 per cent of the lowest shorthaul leisure fares rolled out on 180 routes
    this year sold on line, exceeding a target of 33 per cent.
  • The Executive Club relaunches July 1, 2003 combining five regional schemes
    into one global scheme with more benefits.
  • Three per cent pay increase for 2003 contingent on savings being
    delivered.



Concorde

  • There will be a one-off exceptional charge in the fourth quarter of £84
    million for Concorde. This covers the impairment of capitalised
    modifications and rotable inventory, together with the write-down of
    Concorde expendable stock.

Q4 strategic developments

  • British Airways and American Airlines received tentative regulatory
    approval to apply their flight codes on each others services, excluding
    transatlantic routes between the US and London.
  • Services from London City airport were launched to Frankfurt, Glasgow and
    Paris by British Airways CitiExpress.
  • British Airways and SN Brussels Airlines received approval from the
    European Commission to continue their commercial relationship agreed in July
    2002.
  • Easyjet decided not to buy dba (formally Deutsche BA) but it paid British
    Airways £6.1 million during the option period.




Pensions

  • British Airways pension schemes include the New Airways Pension Scheme
    (NAPS) set up in 1984 and closed to new staff in 2003. It has about 65,000
    members of whom 40,000 are existing staff, fewer than 10,000 are pensioners
    and about 15,000 deferred pensioners.
  • The Airways Pension Scheme (APS) was set up in 1948 and closed to new
    members in 1984. It has 36,000 members of whom 4,000 are serving staff,
    26,000 pensioners in payment and 6,000 deferred pensioners.
  • The British Airways Retirement Plan is a defined contribution scheme and
    was available for new staff from April this year.
  • FRS17 is an accounting methodology that gives a snapshot market value of a
    pension schemes assets and liabilities.



A webcast of British Airways' conference call to city analysts can be accessed
via the internet www.bashares.com - on Monday, May 19 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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