Interim Results - Part 2

British Airways PLC
05 November 2002









COST DRIVE DELIVERS GOOD Q2 RESULTS

  • Pre-tax profit of £245 million

  • Operating profit of £248 million

  • Net costs down 14.3 per cent

  • Unit costs down 6.1 per cent

  • Debt down by £1 billion since December



London, Tuesday, November 5, 2002: British Airways today announced a pre-tax
profit of

£245 million (2001: £5m) for the three months ended September 30, 2002.

The three-month pre-tax figures took the result for the half-year to £310
million (2001: £45 million). Yields in the second quarter were up 1.2 per cent
(2001: 6.1 per cent).

Operating profit for the quarter was £248 million (2001: £72 million). The
figure for the six months was £406 million (2001: £122 million).

Group turnover for the second quarter was £2,104 million (2001: £2,251 million),
down 6.5 per cent on a flying programme reduced by 10.1 per cent, measured in
available seat kilometres (ASKs). Traffic volumes, measured in revenue passenger
kilometres (RPKs), were down 6.8 per cent. Seat factor was up 2.8 points to 76.7
per cent.

Operating cashflow for the six months was £756 million. After disposal proceeds,
capital expenditure and interest, cash inflow was £738 million, a £684 million
improvement. Debt is down by £1 billion since December, its lowest level since
September 1999, to £5,524 million from £6,528 million.

The improved operating results are driven by significant cost reductions in all
areas including manpower, fuel, selling and distribution, engineering and
operational costs, in line with the Future Size and Shape strategy announced in
February and the swift actions taken post September 11, 2001.

There will be no Interim dividend.

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                                        Cost drive delivers good Q2 results ...2

Rod Eddington, the airline's Chief Executive, said: 'Our Future Size and Shape
business strategy focuses on reducing costs, removing complexity and
restructuring our shorthaul business. These results show we are delivering
despite the difficult trading environment and continued uncertainty in the
market. These figures are testament to the continued commitment and dedication
of our people.'


Lord Marshall, British Airways' Chairman, said: 'While the travel market
continues to be subject to global, economic and political uncertainty, the
revenue outlook has stabilised. The implementation of the Future Size and Shape
programme continues on track and is delivering the cost savings that, in the
absence of war or terrorist action, are expected to return our business to
profitability for the full year.'

                                      ends

November 5, 2002                                             KG/122/02

Q2 July - September strategic developments

  • Pay deal for 2002 agreed with ground and engineering staff and cabin crew
  • Manpower reductions since August 2001 total 8,180 and are on track to
    achieve 10,000 by March 2003 and 13,000 by March 2004
  • Achieved £350 million of annualised cost savings against target of £450
    million by March 2003
  • Finalised the rollout of new year-round low fares on 176 key routes to
    Europe and launched supporting advertising campaign
  • Announced the airline's preferred option for a third runway at London
    Heathrow in response to the Government paper on airport infrastructure
    across the UK
  • Winter 2002 schedule commenced with eight route transfers from London
    Gatwick to Heathrow in line with Future Size and Shape strategy
  • Extension of codeshare relationship with Iberia implemented
  • Completed disposal of two aircraft

Q1 April - June strategic developments

  • New pension arrangements for new staff announced
  • Announced alliance with SN Brussels
  • Signed option agreement with easyJet to acquire DBA
  • New commercial agreement with Iberia signed

  • Completed disposal of five aircraft


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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