Final Results Summary

British Airways PLC
20 May 2002

COST REDUCTIONS DRIVE BETTER THAN EXPECTED RESULTS


  • Operating profit for the fourth quarter of £35m, excluding one-off £80m
    exceptional restructuring costs
  • Pre-tax loss for the quarter of £85m
  • Net debt reduced by £268m in the quarter
  • Total costs down 12.1 per cent and unit costs improve 2.8 per cent for the
    quarter excluding one-off restructuring costs
  • Pre-tax loss of £200m for the full year
  • Operating cash flow of £866m for the full year

London, Monday May 20, 2002: British Airways today posted a pre-tax loss of £200
million (2001: £150 million profit) for the full year to March 31, 2002, well
ahead of market expectations. There was a pre-tax loss for the fourth quarter of
£85 million (2001:£65million loss).

The operating profit for the fourth quarter was £35 million, £96 million better
than last year, with a full year operating loss of £30 million, all excluding
exceptional restructuring costs of £80 million (2001: £380 million profit).

Passenger capacity, measured in available seat kilometres (ASKs), reduced by
12.6 per cent for the quarter and 12.4 per cent for the full year. Revenue
passenger kilometres (RPKs) were down by 5.9 per cent for the quarter and 13.7
per cent for the full year. Seat factor up by 5.1 percentage points to 72.1 per
cent in the quarter, down 1 percentage point to 70.4 for the full year.

The actions taken by British Airways in response to the global economic slowdown
earlier in the year and decisions immediately after September 11 have driven the
improved quarterly cost performance. The effect of the company's Future Size and
Shape review announced in February will be realised during this financial year
and the next.

Total costs were down 12.1 per cent for the quarter, and unit costs fell by 2.8
per cent in the same period, all before exceptional restructuring costs. Total
overall costs for the full year fell by 5.9 per cent, excluding exceptional
restructuring costs.

Rod Eddington, British Airways' Chief Executive, said: 'We have had to take a
series of tough decisions this year to protect British Airways for the long
term. It has meant sacrifice and hardship for our people.

'The market is expected to remain soft but the swift and decisive actions we
have taken show we are determined to return the business to acceptable levels of
profitability. The cost reductions have helped to deliver better than expected
year end results. The quarterly improvement is due to the dedication of staff in
delivering cost efficiencies and high standards of customer service during these
difficult times.'

'Throughout the year ahead, our drive on costs will continue along with tight
capacity management and cost control. These are key to our 'Future Size and
Shape' recovery strategy.'

Lord Marshall, British Airways' Chairman, said: 'Reform and re-structuring
against a substantially changed competitive background are well under way. The
concentration is on providing customers with the services they want at prices
which are of value and at costs which make a satisfactory return for
shareholders.

'The current year is one of transition and still subject to global economic and
political uncertainty. The market is expected to remain soft but further
capacity cuts should help to underpin yields and to support increases in seat
factors. In a weak revenue environment, costs remain the focus.'

                                     -ends-

20 May, 2002                                             060/KG/02



Notes to Editors attached





                        Cost reductions drive better than expected results..../3



Notes to Editors:



Pre-September 11:

  • 1,800 job losses in response to UK foot and mouth disease and global
    economic slowdown
  • Bought British Regional Air Lines Group and began integrating UK regional
    subsidiaries
  • Restructuring Gatwick operations to reduce overlap with Heathrow
  • Completed sale of Go



Post-September 11:

  • Grounded 22 aircraft
  • 14 routes suspended and Gatwick de-hubbing strategy accelerated
  • 5,400 further jobs to go
  • British Airways Regional (BAR) to become part of newly formed British
    Airways CitiExpress to create single regional business



February: Future Size and Shape:

  • £650 million annualised cost saving by March 2004, with £450 million of
    this secured by the end of 02/03
  • 5,800 job losses bringing total headcount reductions since August 2001 to
    13,000
  • Significant restructuring of shorthaul business to compete with no frills
    carriers
  • New pricing structure
  • Changes to travel agents payments
  • Cheapest fares online with the launch of Fare Explorer
  • Additional network changes including eight route transfers
  • Intention to sell five aircraft from long haul fleet in addition to two
    B777s already being sold




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