Q1 results press release

British Airways PLC
2 August 2002


COST REDUCTIONS DRIVE BETTER THAN EXPECTED RESULTS

  • Pre-tax profit for the quarter of £65m
  • Operating profit for the first quarter of £158m
  • Net debt reduced by £428m in the quarter
  • Net costs down 14.6 per cent and unit costs improve 2.6 per cent for the
    quarter
  • Operating cash flow of £392m for the quarter

London, Friday August 02, 2002: British Airways today posted a pre-tax profit of
£65 million (2001: £40 million profit) for the first quarter to June 30th, 2002.
The operating profit for the first quarter was £158 million (2001: £50 million
profit).

Passenger capacity, measured in available seat kilometres (ASKs), reduced by
14.5 per cent for the quarter. Revenue passenger kilometres (RPKs) were down by
13.8 per cent for the quarter. Seat factor rose 0.6 points to 70.5 per cent in
the quarter.

Net costs were down 14.6 per cent for the quarter, and unit costs fell by 2.6
per cent in the same period. Revenue in the quarter, at £2,052 million, was down
10.7 per cent. Passenger yields were up 5.0 per cent primarily due to improved
cabin mix.

The improved operating results reflect significant reductions in all areas of
operating cost, including manpower, fuel and selling.

Net debt was £5,866 million, down £428 million since the start of the financial
year. This is due primarily to repayment of debt and a £182 million increase in
cash to £1,401 million.

Rod Eddington, British Airways' Chief Executive, said: ' We are only six months
into a two year structural change programme. Despite very tough market
conditions we are delivering on cost efficiencies. We have always said our
recovery will be cost driven and not dependant on an upturn in market
conditions. That remains true.

'These encouraging results are a testament to the professionalism and dedication
of our staff around the world.'

Lord Marshall, British Airways' Chairman, said: 'The travel market continues to
be subject to considerable global economic and political uncertainty, and is
expected to remain soft for the remainder of the year. As a result, full year
total group revenues are expected to be lower than last year and improvement in
operating results will come principally through cost reductions.

'We remain confident that the implementation of our Future Size and Shape
programme will deliver the expected efficiencies over this and the next
financial year.'

The analysts conference call will be webcast at 14.00 BST on www.bashares.com

                                     -ends-

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.

Notes to Editors:

Recent strategic developments

  • Announced alliance with SN Brussels
  • Signed option agreement with easyJet to acquire DBA
  • New commercial agreement with Iberia signed
  • Extended new low fares pricing structure to 108 routes in Europe
  • Eight further route transfers from Gatwick to Heathrow actioned
  • Completed disposal of seven aircraft plus two subsequent to June 30
  • Manpower reductions are on track to achieve 10,000 by March 2003

February: Future Size and Shape initiatives announced:

  • £650 million annualised cost saving by March 2004, with £450 million of
    this secured by the end of 2002/03
  • A further 5,800 manpower reductions towards a13,000 MPE target by March
    2004
  • Significant restructuring of shorthaul business to compete with no frills
    carriers
  • New shorthaul pricing structure
  • Changes to travel agency payments
  • Cheapest fares online with the launch of Fare Explorer
  • Additional network changes including eight route transfers

Post-September 11:

  • Grounded 22 aircraft
  • 14 routes suspended and Gatwick de-hubbing strategy accelerated
  • 5,400 manpower reductions on top of 1,800 previously announced.
  • British Airways Regional (BAR) to become part of newly formed British
    Airways CitiExpress to create single regional business

Pre-September 11:

  • 1,800 manpower reductions 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


                      This information is provided by RNS
            The company news service from the London Stock Exchange