Interim Results - Part 2

British Airways PLC
10 November 2003



INTERIM RESULTS 2003-2004 (unaudited)

                                                  Three months ended                  Six months ended
                                                        September 30    Better/           September 30    Better/
                                                    2003        2002   ( Worse)       2003        2002    (Worse)

Turnover                              £m           1,983       2,104      (5.8)%     3,815       4,156      (8.2)%

Operating profit                      £m             195         248     (21.4)%       235         406     (42.1)%

Operating margin                      %              9.8        11.8    (2.0)pts       6.2         9.8    (3.6)pts

Profit before tax                     £m             105         245     (57.1)%        60         310     (80.6)%

Retained profit for
the period                            £m              98         152     (35.5)%        35         192     (81.8)%

Net assets at period end              £m           2,343       2,383      (1.7)%     2,343       2,383      (1.7)%

Earnings per share
Basic                                 p              9.2        14.1     (34.8)%       3.3        17.8     (81.5)%
Diluted                               p              8.9        13.7     (35.0)%       3.3        17.4     (81.0)%


nm: Not meaningful


GROUP PROFIT AND LOSS ACCOUNT (unaudited)

                                                  Three months ended                  Six months ended
                                                        September 30   Better/            September 30   Better/
                                                 2003 £m     2002 £m   (Worse)     2003 £m     2002 £m   (Worse)
Traffic Revenue
Passenger                                          1,720       1,812      (5.1)%     3,296       3,587      (8.1)%
Cargo                                                111         119      (6.7)%       224         245      (8.6)%
                                                   1,831       1,931      (5.2)%     3,520       3,832      (8.1)%
Other revenue                                        152         173     (12.1)%       295         324      (9.0)%
TOTAL TURNOVER                                     1,983       2,104      (5.8)%     3,815       4,156      (8.2)%
Employee costs                                       521         516      (1.0)%     1,049       1,043      (0.6)%
Depreciation and amortisation                        173         164      (5.5)%       337         330      (2.1)%
Aircraft operating lease
costs                                                 29          41       29.3%        64          83       22.9%
Fuel and oil costs                                   241         199     (21.1)%       470         413     (13.8)%
Engineering and other
aircraft costs                                       126         142       11.3%       258         282        8.5%
Landing fees and en route
charges                                              147         153        3.9%       288         309        6.8%
Handling charges, catering
and other operating costs                            250         259        3.5%       493         502        1.8%
Selling costs                                        153         197       22.3%       308         412       25.2%
Accommodation, ground equipment costs and            148         185       20.0%       313         376       16.8%
currency differences
TOTAL OPERATING EXPENDITURE                        1,788       1,856        3.7%     3,580       3,750        4.5%

OPERATING PROFIT                                     195         248     (21.4)%       235         406     (42.1)%
Share of operating profits
in associates                                          5           9     (44.4)%         1           6     (83.3)%
TOTAL OPERATING PROFIT                               200         257     (22.2)%       236         412     (42.7)%
INCLUDING ASSOCIATES

Other income and charges                               4                      nm         4                      nm
Profit/(loss) on sale of fixed assets and             15           9       66.7%      (57)          28          nm
investments
Interest
Net payable                                         (56)        (64)       12.5%     (111)       (137)       19.0%
Retranslation (charges)/credits

on currency borrowings                              (58)          43          nm      (12)           7          nm
PROFIT BEFORE TAX                                    105         245     (57.1)%        60         310     (80.6)%
Tax                                                  (4)        (90)       95.6%      (18)       (112)       83.9%
PROFIT AFTER TAX                                     101         155     (34.8)%        42         198     (78.8)%
Non equity minority interest*                        (3)         (3)                   (7)         (6)     (16.7)%
PROFIT FOR THE PERIOD                                 98         152     (35.5)%        35         192     (81.8)%
RETAINED PROFIT FOR THE PERIOD                        98         152     (35.5)%        35         192     (81.8)%
nm: Not meaningful
* Cumulative Preferred Securities



OPERATING AND FINANCIAL STATISTICS (unaudited)

                                                 Three months ended                   Six months ended
                                                       September 30  Increase/            September 30  Increase/
                                                   2003        2002 (Decrease)        2003        2002 (Decrease)

TOTAL AIRLINE OPERATIONS (Note 1)

TRAFFIC AND CAPACITY

RPK (m)                                          27,540      27,301        0.9%     52,642      51,980        1.3%
ASK (m)                                          35,981      35,608        1.0%     70,943      70,628        0.4%
Passenger load factor (%)                          76.5        76.7    (0.2)pts       74.2        73.6      0.6pts
CTK (m)                                           1,034       1,058      (2.3)%      2,091       2,105      (0.7)%
RTK (m)                                           3,796       3,788        0.2%      7,352       7,293        0.8%
ATK (m)                                           5,539       5,449        1.7%     10,856      10,815        0.4%
Overall load factor (%)                            68.5        69.5    (1.0)pts       67.7        67.4      0.3pts
Passengers carried (000)                          9,739      10,607      (8.2)%     19,508      20,272      (3.8)%
Tonnes of cargo carried (000)                       183         189      (3.2)%        373         381      (2.1)%

FINANCIAL

Passenger revenue per RPK (p)                      6.25        6.64      (5.9)%       6.26        6.90      (9.3)%
Passenger revenue per ASK (p)                      4.78        5.09      (6.1)%       4.65        5.08      (8.5)%
Cargo revenue per CTK (p)                         10.74       11.25      (4.5)%      10.71       11.64      (8.0)%
Total traffic revenue per RTK (p)                 48.23       50.98      (5.4)%      47.88       52.54      (8.9)%
Total traffic revenue per ATK (p)                 33.06       35.44      (6.7)%      32.42       35.43      (8.5)%
Average fuel price before hedging
(US cents/US gallon)                              87.83       80.16        9.6%      90.00       78.50       14.6%

OPERATIONS

Average Manpower Equivalent (MPE)                47,702      52,116      (8.5)%     48,459      52,521      (7.7)%
ATKs per MPE (000)                                116.1       104.6       11.0%      224.0       205.9        8.8%
Aircraft in service at
period end                                          312         349        (37)        312         349        (37)


TOTAL GROUP OPERATIONS

FINANCIAL

Net operating expenditure
per RTK (p)                                       43.10       44.43      (3.0)%      44.68       46.98      (4.9)%
Net operating expenditure
per ATK (p)                                       29.54       30.89      (4.4)%      30.26       31.68      (4.5)%



Note 1 Excludes non airline activity companies, principally, Airmiles Travel
Promotions Ltd, BA Holidays Ltd, BA Travel Shops Ltd, Speedbird Insurance
Company Ltd and The London Eye Company Ltd.

CHAIRMAN'S STATEMENT


Group Performance



Group profit before tax for the three months to September 30 was £105 million;
this compares with a profit of £245 million last year. The Board has again
decided that no interim dividend will be paid.



Operating profit - - at £195 million - - was £53 million lower than last year.
The operating margin was 9.8%, 2.0 points lower than last year. The
deterioration in operating profit reflects deterioration in revenue as
continuing economic weakness impacted yield. The quarter included the impact
(approximately £40 million) of the unofficial industrial action in July. This
was partially offset by cost savings delivered by the continuing implementation
of our Future Size and Shape Programme and other initiatives.



Group profit before tax for the six months to September 30 was £60 million, £250
million lower than last year; operating profit - - at £235 million - - was £171
million lower than last year.



Cash inflow before financing was £367 million for the six months, with the
closing cash balance of £1,786 million representing a £134 million increase
versus March 31. Net debt fell by £342 million to £4,807 million, its lowest
level since June 1998.


Turnover


For the three month period, group turnover - - at £1,983 million - - was down
5.8% on a flying programme 1.7% larger in ATKs. Passenger yields were down 5.9%
per RPK; seat factor was down 0.2 points at 76.5% on capacity 1.0% higher in
ASKs.



For the six month period, turnover declined by 8.2% to £3,815 million on a
flying programme 0.4% larger in ATKs. Passenger yields were down 9.3% per RPK
with seat factor up 0.6 points at 74.2% on capacity 0.4% higher in ASKs.



Cargo volumes for the quarter (CTKs) were down 2.3% compared with last year,
with yields (revenue/CTK) down 4.5%. For the six month period, cargo volumes
were down 0.7%, with yields down 8.0%.



Overall load factor for the quarter was down 1.0 point at 68.5%, and for the
half year up 0.3 points at 67.7%.


Costs


For the quarter, unit costs (pence/ATK) improved by 4.4% on the same period last
year. This reflects a net cost reduction of 2.8% on capacity 1.7% higher in
ATKs.


Reductions were achieved in most categories of operating costs, including
aircraft operating lease costs (down 29.3%), engineering and other aircraft
costs (down 11.3%), other operating costs (down 3.5%), selling costs (down
22.3%) and accommodation and other costs (down 20.0%). Fuel costs increased by
21.1% due to the increase in fuel price net of hedging partially offset by
exchange effects, and employee costs increased by 1.0% as manpower reductions
and other efficiencies only partially offset wage and National Insurance
increases.



For the half year, unit costs (pence/ATK) improved by 4.5% on the same period
last year. This reflects a net cost reduction of 4.1% on capacity 0.4% higher in
ATKs.


Non Operating Items



Net interest expense for the quarter reduced by £8 million from last year to £56
million reflecting the impact of lower interest rates, higher cash balances and
reduced debt.



Retranslation of currency borrowings generated a charge of £58 million,
primarily due to the retranslation of yen debt, compared to a credit the
previous year of £43 million. The retranslation - - a non-cash item required by
standard accounting practice - - results from the strengthening of the yen
against sterling.



Profit on disposals of fixed assets and investments was £15 million, up £6
million from last year.



For the six month period interest expense, including the retranslation of
currency borrowings, was £123 million, down £7 million on last year. Loss on
disposals of fixed assets and investments was £57 million, reflecting primarily
the sale of dba at a loss in the period of £83 million. This compares with a
profit on disposal last year of £28 million.


Earnings Per Share



The profit attributable to shareholders for the three months was equivalent to
9.2 pence per share, compared with last year's profit per share of 14.1 pence.


For the six month period, the profit attributable to shareholders was £35
million, equivalent to 3.3 pence per share, compared with earnings of 17.8 pence
per share last year.



Net Debt / Total Capital Ratio



Borrowings, net of cash and short term loans and deposits, were £4,807 million
at September 30 - - the lowest since June 1998 and down £342 million since the
start of the year. This reflects cash inflow more than offsetting movements in
gross debt, together with exchange gains of £62 million. The net debt/total
capital ratio reduced by 2.3 points from March 31 to 58.4%. The net debt/total
capital ratio including operating leases was down 2.4 points from March 31 to
61.8%.


Cash Flow


During the six months we generated a positive cash flow from operations of £520
million. After disposal proceeds, capital expenditure and interest payments on
our existing debt, cash inflow was £367 million. This represents a £371 million
deterioration on last year, primarily due to the deterioration in operating cash
flow (£236 million), and a reduction in disposal proceeds (£178 million),
partially offset by reductions in interest payments (£31 million) and capital
expenditure (£6 million).


Aircraft Fleet


During the quarter the Group fleet in service reduced by 2 to 312 aircraft. This
reduction comprised 3 ATR72 aircraft stood down pending return to lessor,
partially offset by the delivery of an Airbus A320 aircraft.


With the retirement of the Concorde fleet on October 24, the five aircraft
remaining in service were stood down.


Future Size and Shape


The implementation of our Future Size and Shape programme including the Business
Plan initiatives of Customer Enabled BA and the £300 million reduction targeted
in external spend, remains on track.



Forecast capital spend for the year remains on target. FSAS disposal proceeds at
September 30 were £694 million (including £611 million to March 31, 2003) and
the remaining £206 million to achieve the £900 million target will be delivered
before year end.



The Group manpower reduction since August 2001 totals 14,623 including 1,397
relating to the disposal of World Network Services and 750 relating to the
disposal of dba. Against the FSAS target of 13,000, this is a reduction of
12,087.


Associates


Qantas announced full year profits before tax of A$502 million, with the
second-half loss of A$11 million their first loss since privatisation. Our
non-participation in their dividend reinvestment plan resulted in the reduction
of our holding from 18.93% to 18.75%.


Alliance Development


On September 22 British Airways signed a legally binding Memorandum of
Understanding with Swiss International Air Lines.


The agreement involves joint operations between the UK and Switzerland with
code-sharing on London Heathrow Swiss routes. The London Heathrow to Zurich,
Geneva and Basle code-share opened for sale on October 20. British Airways will
enter into a slot exchange agreement for eight Heathrow daily slot pairs from
Swiss. Swiss will enter the oneworld alliance, and the Swiss frequent flyer
scheme will be gradually integrated into the British Airways Executive Club.


Outlook


Trading patterns seen over the last few months point to a more stable outlook
for revenue. The recent positive economic news from the United States is a
welcome development, but is not yet showing in forward bookings. In the soft
revenue environment continued delivery of business efficiency and cost
improvement is core to improving profitability.


Note:

Copies of the summary Interim Statement will be issued to all shareholders
through the medium of the British Airways Investor newspaper. Copies of the full
Interim report are available from the Company's registered office and on the
Internet at www.british-airways.com/investor.



Certain information included in these statements 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 itemize 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 2003.



GROUP BALANCE SHEET
(unaudited)

                                                                                          September 30    March 31
                                                                                   2003 £m     2002 £m     2003 £m

FIXED ASSETS
Intangible assets                                                                      159         150         164
Tangible assets                                                                      9,156       9,940       9,487
Investments                                                                            531         500         524
                                                                                     9,846      10,590      10,175

CURRENT ASSETS
Stocks                                                                                  75          95          87
Debtors                                                                              1,126       1,171         986
Cash, short-term loans and deposits                                                  1,786       1,538       1,652
                                                                                     2,987       2,804       2,725
CREDITORS: AMOUNTS FALLING
DUE WITHIN ONE YEAR                                                                (2,954)     (2,947)     (2,904)
NET CURRENT ASSETS/(LIABILITIES)                                                        33       (143)       (179)

TOTAL ASSETS LESS CURRENT LIABILITIES                                                9,879      10,447       9,996

CREDITORS: AMOUNTS FALLING DUE AFTER MORE
THAN ONE YEAR
Borrowings and other creditors                                                     (6,254)     (6,719)     (6,441)
Convertible Capital Bonds 2005                                                       (112)       (112)       (112)
                                                                                   (6,366)     (6,831)     (6,553)
PROVISION FOR DEFERRED TAX                                                         (1,077)     (1,128)     (1,062)
PROVISIONS FOR LIABILITIES AND CHARGES                                                (93)       (105)       (107)

                                                                                     2,343       2,383       2,274

CAPITAL AND RESERVES
Called up share capital                                                                271         271         271
Reserves                                                                             1,853       1,915       1,787
                                                                                     2,124       2,186       2,058
MINORITY INTEREST
Equity minority interest                                                                10           9          10
Non equity minority interest                                                           209         188         206
                                                                                       219         197         216

                                                                                     2,343       2,383       2,274


STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES (unaudited)
                                                                                      Six months ended  Year Ended
                                                                                          September 30    March 31
                                                                                   2003 £m     2002 £m     2003 £m


Profit for the period                                                                   35         192          72
Other recognised gains and losses
relating to the period:
Exchange and other movements                                                            19        (22)        (38)

Total recognised gains and losses                                                       54         170          34



These summary financial statements were approved by the Directors on November 7,
2003.



GROUP CASH FLOW STATEMENT (unaudited)
                                                                                      Six months ended  Year Ended
                                                                                          September 30    March 31
                                                                                   2003 £m     2002 £m     2003 £m

CASH INFLOW FROM OPERATING                                                             520         756       1,185
ACTIVITIES

DIVIDENDS RECEIVED FROM ASSOCIATES                                                      12          10          23

RETURNS ON INVESTMENTS AND SERVICING OF                                              (121)       (152)       (249)
FINANCE

TAX                                                                                    (2)         (6)         (7)

CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT                                             4         104         250

ACQUISITIONS AND DISPOSALS                                                            (46)          26          29

Cash inflow before management of liquid                                                367         738       1,231
resources and financing

MANAGEMENT OF LIQUID RESOURCES                                                       (153)       (334)       (289)

FINANCING                                                                            (237)       (412)       (784)

(Decrease)/increase in cash in the period                                             (23)         (8)         158


NOTES TO THE ACCOUNTS
For the period ended September 30, 2003

1  ACCOUNTING CONVENTION

The accounts have been prepared on the basis of the accounting policies set out
in the Report and Accounts for the year ended March 31, 2003 in accordance with
all applicable United Kingdom accounting standards and the Companies Act 1985.


                                                                                          Six months ended  Year Ended
                                                                                              September 30    March 31
                                                                                       2003 £m     2002 £m     2003 £m
2  RECONCILIATION OF OPERATING PROFIT TO
CASH INFLOW FROM OPERATING ACTIVITIES
Group operating profit                                                                     235         406         295
Depreciation and amortisation                                                              337         330         734
(Increase)/decrease in stocks and debtors                                                (129)          49         238
Increase/(decrease) in creditors                                                            92         (8)        (62)
Decrease in provisions for liabilities and charges                                        (15)        (21)        (20)
Cash inflow from operating activities                                                      520         756       1,185

3  RECONCILIATION OF NET CASH FLOW TO
MOVEMENT IN NET DEBT
(Decrease)/increase in cash during the period                                             (23)         (8)         158
Net cash outflow from decrease in debt                                                     237         412         784
and lease financing
Cash outflow from liquid resources                                                         153         334         289
Change in net debt resulting from cash flows                                               367         738       1,231
New finance leases taken out and hire
purchase arrangements made                                                                (87)       (113)       (221)
Exchange movements                                                                          62         145         135
Movement in net debt during the period                                                     342         770       1,145
Net debt at April 1                                                                    (5,149)     (6,294)     (6,294)
Net debt at period end                                                                 (4,807)     (5,524)     (5,149)


                                                                            Three months ended        Six months ended
                                                                                  September 30            September 30
                                                                            2003 £m    2002 £m     2003 £m     2002 £m

4  OTHER INCOME
Other                                                                             4                      4
                                                                                  4                      4

Other income and charges represented by:
Group                                                                             4                      4
                                                                                  4                      4


NOTES TO THE ACCOUNTS (Continued)
For the period ended September 30, 2003

                                                                        Three months ended        Six months ended
                                                                              September 30            September 30
                                                                         2003 £m   2002 £m     2003 £m     2002 £m
5  PROFIT/(LOSS) ON SALE OF FIXED ASSETS AND
INVESTMENTS
Net loss on disposal of dba (note 1)                                         (4)                  (83)
Net additional profit from onward disposal of go                                        10                      10
Net profit on disposal of other fixed
assets and investments                                                        19       (1)          26          18
                                                                              15         9        (57)          28

Represented by:
Group                                                                         14         9        (58)          28
Associates                                                                     1                     1
                                                                              15         9        (57)          28

Note 1:

On June 30, 2003 British Airways completed the sale of 100% of its interest in
Deutsche BA Luftfahrgesellschaft GmbH (dba) to Intro GmbH. The loss on disposal
under the terms of the sale agreement will be finalised after the completion
accounts have been agreed.


6  INTEREST
Net payable:
Interest payable less amount capitalised                                     70         81         139         168
Interest receivable                                                        (14)       (17)        (28)        (31)
                                                                             56         64         111         137
Retranslation charges/(credits) on currency                                  58       (43)          12         (7)
borrowings
                                                                            114         21         123         130

Net interest payable represented by:
Group                                                                       111         19         120         128
Associates                                                                    3          2           3           2
                                                                            114         21         123         130

7  TAX

The tax charge for the quarter is £4 million. This represents current tax of £3
million payable overseas on the Group's share of income from associates and £1
million by way of deferred taxes in the UK. The deferred tax provision on the
balance sheet of £1,077 million at September 30, 2003 (September 30, 2002:
£1,128 million, March 31, 2003: £1,062 million) is not expected to become
payable in the foreseeable future.



8  EARNINGS PER SHARE

Basic earnings per share for the quarter ended September 30, 2003 are calculated
on a weighted average of 1,069,895,000 ordinary shares (September 30, 2002:
1,076,134,000) and for the six months ended September 30, 2003, on a weighted
average of 1,069,891,000 ordinary shares (September 30, 2002: 1,076,124,000) as
adjusted for shares held for the purposes of employee share ownership plans
including the Long Term Incentive Plan.  Diluted earnings per share for the
quarter ended September 30, 2003 are calculated on a weighted average of
1,117,939,000 ordinary shares (September 30, 2002: 1,124,260,000) and for the
six months ended September 30, 2003 on a weighted average of 1,069,891,000
ordinary shares (September 30, 2002: 1,124,224,000).



The number of shares in issue at September 30, 2003 was 1,082,795,000 (September
30, 2002: 1,082,784,000; March 31, 2003: 1,082,784,000) ordinary shares of 25
pence each.



NOTES TO THE ACCOUNTS (Continued)
For the period ended September 30, 2003
                                                                                          September 30    March 31
                                                                                   2003 £m     2002 £m     2003 £m

9  INTANGIBLE ASSETS
Goodwill                                                                                96          99          99
Landing rights                                                                          63          51          65
                                                                                       159         150         164


10 TANGIBLE ASSETS
Fleet                                                                                7,549       8,250       7,828
Property                                                                             1,191       1,224       1,219
Equipment                                                                              416         466         440
                                                                                     9,156       9,940       9,487

11 INVESTMENTS
Associated undertakings                                                                469         431         461
Trade investments                                                                       31          44          32
Investment in own shares                                                                31          25          31
                                                                                       531         500         524

12 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Loans                                                                                   63          64          57
Finance Leases                                                                         126         133         124
Hire Purchase Arrangements                                                             369         330         362
                                                                                       558         527         543
Corporate tax                                                                           18          39          19
Other creditors and accruals                                                         2,378       2,381       2,342
                                                                                     2,954       2,947       2,904

13 BORROWINGS AND OTHER CREDITORS FALLING DUE AFTER
MORE THAN ONE YEAR
Loans                                                                                1,295       1,323       1,275
Finance Leases                                                                       2,338       2,454       2,430
Hire Purchase Arrangements                                                           2,290       2,646       2,441
                                                                                     5,923       6,423       6,146
Other creditors and accruals                                                           331         296         295
                                                                                     6,254       6,719       6,441

14 RESERVES
Balance at April 1                                                                   1,787       1,745       1,745
Retained profit for the period                                                          35         192          72
Exchange and other adjustments                                                          19        (22)        (38)
Goodwill written back on disposals                                                      12                       8
                                                                                     1,853       1,915       1,787


15 The figures for the three months and six months ended September 30, 2003 and
2002 are unaudited and do not constitute full accounts within the meaning of
Section 240 of the Companies Act 1985.  The figures for the year ended March 31,
2003 have been extracted from the full accounts for that year, which have been
delivered to the Registrar of Companies and on which the auditors have issued an
unqualified audit report.


INDEPENDENT REVIEW REPORT TO BRITISH AIRWAYS Plc


Introduction

We have been instructed by the Company to review the financial information for
the three months and six months ended September 30, 2003, which comprises the
Group Profit and Loss Account, Group Balance Sheet, Group Cash Flow Statement,
Group Statement of Recognised Gains and Losses and Notes to the Accounts and we
have read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies with
the financial information.



This report is made solely to the Company in accordance with guidance contained
in Bulletin 1999/4 'Review of Interim Financial Information' issued by the
Auditing Practices Board. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company, for our work,
for this report, or for the conclusions we have formed.



Directors' responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors.  The Listing
Rules of the Financial Services Authority require that the accounting policies
and presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.



Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom.  A review
consists principally of making enquires of Group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed.  A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly we do not express
an audit opinion on the financial information.



Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the three months
and six months ended September 30, 2003.


Ernst & Young LLP
London

November 7, 2003


UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (US GAAP) INFORMATION


The accounts have been prepared in accordance with accounting principles
accepted in the United Kingdom which differ in certain respects from those
generally accepted in the United States. The significant differences are the
same as those set out in the Report and Accounts for the year ended March 31,
2003.


The adjusted net income and shareholders' equity applying US GAAP are set out
below:


                                                                        Three months ended        Six months ended
                                                                              September 30            September 30
                                                                         2003 £m   2002 £m     2003 £m     2002 £m

Profit for the period as reported in the
Group profit and loss account                                                 98       152          35         192
US GAAP adjustments                                                           44        79         108         175
Net income as so adjusted to
accord with US GAAP                                                          142       231         143         367

Net income per Ordinary Share as so
adjusted
Basic                                                                      13.3p     21.5p       13.4p       34.1p
Diluted                                                                    12.9p     20.7p       13.1p       33.0p

Net income per American Depositary Share
as so adjusted
Basic                                                                       133p      215p        134p        341p
Diluted                                                                     129p      207p        131p        330p

                                                                                          September 30    March 31
                                                                                   2003 £m     2002 £m     2003 £m

Shareholders' equity as reported in the Group                                        
balance sheet                                                                        2,124       2,186       2,058      
                                                         
US GAAP adjustments                                                                   (56)         246       (126)
Shareholders' equity as so adjusted to accord with US                                2,068       2,432       1,932
GAAP



AIRCRAFT FLEET

                  Number in service with Group companies at September 30, 2003
                                 On balance       Operating leases                  Changes
                                      sheet      off balance sheet       Total        Since       Future
                                   Aircraft                           Sep 2003     Jun 2003   deliveries   Options
AIRLINE OPERATIONS  (Note 1 & 2)

Concorde  (Note 3)                        5                                  5
Boeing 747-400                           57                                 57
Boeing 777                               43                                 43
Boeing 767-300 (Note 4)                  21                                 21
Boeing 757-200                           13                                 13
Airbus A319 (Note 5)                     21          12                     33                         3        66
Airbus A320                              11          16                     27            1            3
Airbus A321                                                                                           10
Boeing 737-300                                        5                      5
Boeing 737-400                           19           8                     27
Boeing 737-500                                       10                     10
Turbo Props (Note 6)                                 22                     22          (3)
Embraer RJ145                            16          12                     28                                  17
Avro RJ100                                           16                     16
British Aerospace 146                     5                                  5
GROUP TOTAL                             211         101                    312          (2)           16        83


Notes:

1.  Includes those operated by British Airways Plc, CityFlyer Express and
    British Airways CitiExpress.

2.  Excludes 2 British Aerospace ATPs and 3 ATR72s stood down pending return to
    lessor and 12 Jetstream 41s sub-leased to Eastern Airways.

3.  Excludes 2 Concordes stood down pending retirement of the fleet on October
    24, 2003.

4.  Includes 1 Boeing 767 - 300 temporarily out of service.

5.  Certain future deliveries and options include reserved delivery positions,   
    and may be taken as any A320 family of aircraft.

6.  Includes 10 British Aerospace ATPs, 2 ATR72s and 10 de Havilland Canada
    DHC-8s.




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