Full Year Pre-Tax Profit ,etc
British Airways PLC
23 May 2000
FULL YEAR PRE-TAX PROFIT OF £5 MILLION
British Airways today unveiled pre-tax profits of £5
million for the 12 months ended March 31, 2000 (1999
: £225 million), ahead of average market expectations.
The results included additional costs of £67 million
due to higher fuel prices, £136 million due to the non-
cash translation of foreign currency exposures on cost-
effective aircraft financing, and £88 million of
restructuring costs. They also reflected gains of £249
million on asset disposals, including £149 million from
the disposal of the remaining shares in Galileo
International Inc. and £58 million from the further
part-disposal of the interest held in Equant.
Operating profits for the year were £84 million (1999 :
£442 million).
Group turnover for the year was up 0.5 per cent, at
£8,940 million. In the mainline passenger business,
traffic volumes measured in revenue passenger
kilometres (RPKs) fell by 0.7 per cent. Mainline
capacity measured in available seat kilometres (ASKs)
grew by only 0.7 per cent in-line with the group's
strategy. This resulted in a passenger load factor of
69.8 per cent, down 0.9 percentage points on a year
ago.
Group operating expenditure for the 12-month period
rose by 4.8 per cent to £8,856 million, resulting in a
1.8 per cent rise in unit costs. Excluding the
additional costs relating to escalating fuel prices and
restructuring provisions, the growth in unit costs was
limited to just 0.3 per cent reflecting the group's
investment in product and customer service improvements
offset by successful progress on cost initiatives.
Cost efficiencies from the three-year Business
Efficiency Programme comfortably exceeded the £1
billion target.
Passenger yield improved for the second quarter running
reflecting the successful implementation of the new
strategy, with mainline scheduled yield up by 3.3% for
the three months to March 31, but the impact of
significantly higher fuel prices, the continued
strength of the pound, and additional restructuring
costs contributed to a loss before tax of £175 million
for the quarter.
The Directors recommend a final dividend of 12.8 pence
per share, giving a total for the year of 17.9 pence,
unchanged from last year. This reflects the continued
confidence in the airline's strategy and improving
financial performance going forward.
The Group continues to implement its strategy and to
improve the customer proposition it delivers to
travellers. Its programme of investment in product
innovation in all cabins will revolutionise 21st century
air travel. The new 'lounge in the sky' in Club World
will be fully embodied on the New York route by July, the
upgrade of the World Traveller cabin for longhaul economy
passengers is almost 60 per cent complete, and the
embodiment of new Club Europe is around 50 per cent
complete. Improvements to the First product have also
already begun. The new World Traveller Plus cabin will be
available from July.
Progress also continues to be made on a number of other
fronts, including the airline's e-business plans. Recent
announcements on British Airways' participation in the
first European multi-airline travel portal, and the
formation of a B2B trade exchange complement the airline's
other e-commerce initiatives.
Lord Marshall, Chairman of British Airways, said: 'These
results mark the end of the most difficult year that
British Airways has had since privatisation. Whilst
airlines have reduced capacity growth plans, we still
expect the excess capacity in some of our key markets to
take some time to unwind. The high fuel price and the
strength of sterling against the euro continue to be
issues for us. The implementation of our fleet, network
and product strategies together with our ongoing efforts
on cost efficiency and renewed focus on staff morale give
us cause for more medium-term optimism.'
Rod Eddington, Chief Executive said: 'Since my arrival at
the beginning of May, I have been talking to staff,
customers, investors and other key stakeholders in the
business. I have been impressed by their enthusiasm and
their determination. I believe that the basic planks of
our strategy which include developing frequency, network
and customer service are a good foundation for a return to
profitability.'
The Annual General Meeting will be held at the Barbican
Centre, London on July 11, at 11am. The full report and
accounts or summary financial statements will be
distributed to shareholders in the week beginning June 12
and from that time copies will be available to members of
the public at the company's registered office.
For more information, please contact:
Simon Walker British Airways Tel: 020 8738 5100
Nick Claydon British Airways Tel: 020 8738 5100
Mitesh Kotecha British Airways Tel: 020 8738 5100
Louise Evans British Airways Tel: 020 8738 5100
Sarah James British Airways Tel: 020 8738 5100
James Hogan Brunswick Tel: 020 7404 5959