Q2 & Interim Results - Half Year Profits £240m
British Airways PLC
8 November 1999
RESULTS AHEAD OF EXPECTATIONS AS STRATEGY KICKS IN
HALF-YEAR PROFITS £240M
British Airways today unveiled pre-tax profits for the
second quarter ahead of expectations at £70m, excluding
severance and disposals. Pre-tax profits for the six
months to 30th September 1999 were £240m, compared with
£385m for the same period last year. This included £191
million of profits on disposals, primarily from the
sale of the remaining interest in Galileo International
Inc., during the first quarter.
Operating profits for the six months were £211 million
and earnings per share were 20.3 pence per share,
compared to 33.2 pence last year. A dividend of 5.1
pence per share has been declared, unchanged from last
year.
Cost efficiencies from the three year Business
Efficiency Programme have now topped the £1bn per annum
target. Further profit improvements of £225m are
expected for the full year.
Investment in products and services for customers has
also increased, focused on unbeatable premium and
economy products for the year ahead and beyond. New
products include the Next Generation Club Europe
launched in September; Club World Flying Beds from 1st
March 2000 and the upgrading of Concorde from next
September.
With these investments and the continuing company-wide
programme of training and motivation, British Airways
will continue to deliver the highest standards of
customer service. Customer service indicators -
including punctuality and baggage handling - have
improved over last year. British Airways is now the
most punctual major airline in Europe.
Bob Ayling, Chief Executive said: 'It has been a tough
year for the international airline industry but our
strategy puts us in a position to benefit strongly as
business picks up. Other airlines are now following
our lead in cutting capacity and this will help close
the gap in demand. Already, our actions have helped to
deliver a good yield performance relative to our
competitors and we expect this to continue. And we are
making significant investments in our products and
services which will give us an unbeatable competitive
advantage in the years ahead.'
Lord Marshall, Chairman of British Airways, said:
'Whilst the immediate outlook is challenging, the
positive actions of the management in changing the
fleet and network strategy and the continued focus on
customer service and cost efficiency, will restore the
profitability of the company.'
For more information, please contact:
Simon Walker British Airways Tel: 0181 738 5100
Nick Claydon British Airways Tel: 0181 738 5100
James Hogan Brunswick Tel: 0171 404 5959
Rob Pinker Brunswick Tel: 0171 404 5959
Craig Breheny Brunswick Tel: 0171 404 5959
INTERIM RESULTS 1999-2000 (unaudited)
Three months ended Six months ended
September 30 September 30
1999 1998 Change 1999 1998 Change
Turnover £m 2,413 2,443 (1.2)% 4,635 4,721 (1.8)%
Operating profit £m 117 262 (55.3)% 211 435 (51.5)%
Profit before tax £m 40 240 (83.3)% 240 385 (37.7)%
Retained(loss)/profit
for the £m (27) 162 (116.7)% 161 293 (45.1)%
period
Capital and
reserves at £m 3,750 3,615 3.7% 3,750 3,615 3.7%
period end
Earnings per share
Basic p 2.8 20.6 (86.4)% 20.3 33.2 (38.9)%
Diluted p 2.9 19.5 (85.1)% 19.7 31.4 (37.3)%
Dividends per p 5.1 5.1 5.1 5.1
share
GROUP PROFIT AND LOSS ACCOUNT (unaudited)
Three months ended Six months ended
September 30 September 30
1999 £m 1998 £m Change 1999 £m 1998 £m Change
Traffic Revenue
Scheduled passenger 2,011 2,091 (3.8)% 3,879 4,011 (3.3)%
Scheduled cargo 145 140 3.6% 269 272 (1.1)%
Non-scheduled 28 22 27.3% 49 39 25.6%
services
2,184 2,253 (3.1)% 4,197 4,322 (2.9)%
Other revenue 229 190 20.5% 438 399 9.8%
TOTAL TURNOVER 2,413 2,443 (1.2)% 4,635 4,721 (1.8)%
Employee costs 667 622 7.2% 1,269 1,215 4.4%
Depreciation 160 158 1.3% 314 307 2.3%
Aircraft operating
lease costs 44 36 22.2% 88 70 25.7%
Fuel and oil costs 193 183 5.5% 366 363 0.8%
Engineering and
other aircraft costs 179 178 0.6% 354 335 5.7%
Landing fees and en
route charges 180 194 (7.2)% 363 373 (2.7)%
Handling charges,
catering and other
operating costs 350 323 8.4% 663 651 1.8%
Selling costs 295 314 (6.1)% 585 613 (4.6)%
Accommodation,
ground equipment
costs and currency 228 173 31.8% 422 359 17.5%
differences
TOTAL OPERATING
EXPENDITURE 2,296 2,181 5.3% 4,424 4,286 3.2%
OPERATING PROFIT 117 262 (55.3)% 211 435 (51.5)%
Share of operating
profits in 29 25 16.0% 30 27 11.1%
associates
TOTAL OPERATING
PROFIT INCLUDING 146 287 (49.1)% 241 462 (47.8)%
ASSOCIATES
Other income 2 18 (88.9)% 3 19 (84.2)%
Profit on sale
of fixed assets and
investments 14 3 nm 191 9 nm
Interest
Net payable (63) (68) (7.4)% (128) (124) 3.2%
Retranslation
(charges)/credits on
currency borrowings (59) nm (67) 19 nm
payable
PROFIT BEFORE TAX 40 240 (83.3)% 240 385 (37.7)%
Taxation (7) (24) (70.8)% (17) (38) (55.3)%
PROFIT AFTER TAX 33 216 (84.7)% 223 347 (35.7)%
Non equity minority
interest* (3) nm (5) nm
PROFIT FOR THE 30 216 (86.1)% 218 347 (37.2)%
PERIOD
Dividends paid and
proposed (57) (54) 5.6% (57) (54) 5.6%
RETAINED
(LOSS)/PROFIT FOR (27) 162 (116.7)% 161 293 (45.1)%
THE PERIOD
nm: Not meaningful
* Cumulative Preferred Securities
OPERATING AND FINANCIAL STATISTICS (unaudited)
MAINLINE Three months Six months ended
SCHEDULED ended
SERVICES September 30 September 30
1999 1998 Change 1999 1998 Change
TRAFFIC AND CAPACITY
RPK (m) 33,046 33,429 (1.1)% 62,825 62,746 0.1%
ASK (m) 43,554 43,672 (0.3)% 85,936 85,029 1.1%
Passenger load 75.9 76.5 (0.6)pts 73.1 73.8 (0.7)pts
factor(%)
CTK (m) 1,118 1,077 3.8% 2,151 2,141 0.5%
RTK (m) 4,415 4,416 (0.0)% 8,411 8,397 0.2%
ATK (m) 6,309 6,222 1.4% 12,412 12,142 2.2%
Overall load factor(%) 70.0 71.0 (1.0)pts 67.8 69.2 (1.4)pts
Passengers carried 10,295 10,508 (2.0)% 19,730 19,965 (1.2)%
(000)
Tonnes of cargo
carried (000) 221 213 3.8% 425 423 0.5%
FINANCIAL
Passenger revenue
per RPK (p) 5.63 5.89 (4.4)% 5.71 6.01 (5.0)%
Cargo revenue per 12.70 12.72 (0.2)% 12.23 12.42 (1.5)%
CTK(p)
Average fuel price
(US cents/US gallon) 63.62 48.00 32.5% 57.95 50.12 15.6%
TOTAL GROUP OPERATIONS (including Deutsche BA, Air Liberte and 'go')
TRAFFIC AND CAPACITY
RPK (m) 35,873 35,543 0.9% 67,905 66,678 1.8%
ASK (m) 47,465 46,792 1.4% 93,278 90,822 2.7%
RTK (m) 4,689 4,630 1.3% 8,904 8,787 1.3%
ATK (m) 6,690 6,533 2.4% 13,127 12,707 3.3%
Passengers carried 12,983 12,608 3.0% 24,716 24,017 2.9%
(000)
FINANCIAL
Total traffic
revenue per RTK (p) 46.57 48.66 (4.3)% 47.14 49.19 (4.2)%
Total traffic
revenue per ATK (p) 32.65 34.49 (5.3)% 31.97 34.01 (6.0)%
Net operating
expenditure per RTK (p)44.08 43.00 2.5% 44.77 44.24 1.2%
Net operating
expenditure per ATK (p)30.90 30.48 1.4% 30.36 30.59 (0.8)%
OPERATIONS
Average Manpower
Equivalent (MPE) 65,607 64,106 2.3% 65,393 63,522 2.9%
ATKs per MPE (000) 102.0 101.9 0.1% 200.7 200.0 0.3%
Aircraft in service
at period end 340 344 (4) 340 344 (4)
CHAIRMAN'S STATEMENT
Group Performance
Group profits before tax for the three months ended September 30, 1999
were £40 million. Pre-tax profits, excluding severance and disposals,
were £70m. Underlying profits (ie. excluding book charges relating to
the revaluation of yen loans, one-off restructuring costs to achieve
future productivity gains and profits on disposals), were £132 million
- down £111 million or 46% from a year ago. Operating profits were
£117 million.
For the six months ended September 30, 1999, group profits before tax
were £240 million. This included £191 million of profits on disposals,
primarily from the sale of our remaining interest in Galileo
International Inc. during the first quarter. Operating profits were
£211 million.
Operating profits have been adversely affected by lower yields; the
glut of low fares in the market derives from excess industry capacity.
But cost performance has been maintained despite higher spending on
product and customer services, one-off restructuring costs and
negligible growth -- mainline passenger capacity was 3/10 of a point
down on a year ago -- overall unit costs rose by just 1.4%. At 4.8%,
operating margin for the three months was down 5.9 points compared with
a year ago.
An interim dividend of 5.1 pence per share has been declared, unchanged
from last year. The dividend will be payable to shareholders on the
register at November 19, 1999.
Turnover
Turnover for the three months -- at £2,413 million -- was down 1.2% on
a mainline flying programme 1.4% bigger in available tonnes kilometres
(ATKs). Mainline passenger seat factor was down 6/10 of a point at
75.9%. Yields (pence per revenue passenger kilometre - RPK) were down
4.4% primarily because excess industry capacity continued to drive
heavy discounting, especially in the economy passenger market. Reduced
demand in the premium cabin market on European routes also put pressure
on yields.
For the six month period, turnover -- at £4,635 million -- was down
1.8% on a mainline flying programme 3.3% bigger in ATKs. Mainline
passenger yields were down 5%, with passenger load factor down 7/10 of
a point.
In Cargo, for the three month period, sales increased 3.6%, with tonnes
carried 3.8% higher than a year ago; yields were marginally down.
Unit Costs
Unit costs (pence per ATK) were 1.4% higher in the quarter year-over-
year. Cost efficiencies from the 3 year Business Efficiency Programme
have now exceeded the £1 billion target thanks to additional profit
improvement actions in the current year. These cost efficiencies were
partially offset by adverse exchange rate movements, additional
restructuring charges relating to the profit improvement programme
currently underway and higher spending on products and services.
Overall, total operating costs increased by 5.3%.
For the six month period, unit costs fell marginally by 8/10 of a
point; total operating costs rose 3.2%.
Non Operating Items
Profits on disposals of fixed assets and investments were £14 million
in the quarter, primarily from the sale and leaseback of five Boeing
737-200s. The cumulative profits on disposal of fixed assets and
investments were £191 million, including £149 million on the disposal
of our remaining shares in Galileo International Inc., the disposal of
our in-flight catering facility at Gatwick to ALPHA Catering Services,
the sale of our investment in the Sapphire Leasing Company and other
aircraft disposals.
Net interest expense was £63 million for the quarter and £128 million
for the six months to September 30. Additionally, retranslation of
foreign debt, mainly yen, cost £59 million in the quarter, giving a
cumulative book charge for the six months of £67 million.
The yen debt, repayable between 2007 and 2011, will be repaid from
operating cash generated in Japan, which provides a natural (and free)
hedge against currency losses. In the meantime, despite this,
accounting rules require that the yen debts are 'marked to market'.
Earnings Per Share
For the three month period, profits attributable to shareholders were
£30 million, equivalent to earnings of 2.8 pence per share.
For the six months, profits attributable to shareholders were £218
million, equivalent to earnings of 20.3 pence per share -- compared to
33.2 pence last year.
Net Debt / Total Capital Ratio
Borrowings, net of cash and short term loans and deposits, amounted to
£5,368 million at September 30, 1999 -- down £158 million since March
31. The reduction is due primarily to the cash received on the issue
of Euro 300 million of Cumulative Preferred Securities in May.
Net debt/total capital ratio improved to 59% at September 30 -- down
from 62% at March 31, 1999.
Aircraft Fleet
Another important component in our shorthaul fleet and network strategy
for the new millennium was announced in October, comprising an order
for twelve new 100 seat Airbus A318 aircraft, with an option on a
further twelve. The first delivery is due in January 2003. These
A318s will enable more efficient crewing and maintenance and will allow
the airline to respond more flexibly to changing market conditions on
shorthaul routes. They will replace Boeing 757s on domestic and
European routes.
As part of the revised aircraft strategy, we announced in early October
the disposal of 34 Boeing 757s to a subsidiary of Boeing. These
aircraft are expected to be converted by Boeing into freighters for
express parcel courier DHL. Deliveries of the Boeing 757s will begin
in July 2000 and continue until March 2003.
In the three months to September 30, 1999, the group fleet increased by
three aircraft. In mainline operations three Boeing 777s entered
service, whilst two Boeing 737-200s were stood down. In the
subsidiaries, two Boeing 737-300s joined the go fleet, bringing the
total fleet to twelve aircraft.
Alliance Development
Our proposed acquisition for £75 million of one of our most successful
franchise partners, CityFlyer Express, was recently cleared by the
Secretary of State for Trade and Industry with no requirement to divest
slots at Gatwick.
Year 2000
British Airways announced on 20 September its schedule for the
Millennium and confirmed that it would be operating 285 flights on New
Year's Eve and New Year's Day, including 20 flights in the air at
midnight GMT.
Independent Year 2000 assessors appointed by the Civil Aviation
Authority reconfirmed the 'blue' rating in September, certifying
British Airways to be ready for 'business as usual'.
Outlook
The trading environment for the winter continues to be challenging.
Industry capacity growth, particularly on the North Atlantic, will
exceed market demand; price competition will continue to be intense.
High fuel prices and strong sterling are additional negative factors.
Next summer, however, gives cause for cautious optimism: other airlines
are now following BA's lead and indicating that they intend to cut back
on capacity growth, improving the balance between demand and supply.
In addition, the UK economy, our largest market, is strengthening and
South East Asia is improving fast. Premium cabin passenger mix is
improving.
Our plans are based on three fundamental elements. First, cutbacks in
capacity and the revised fleet strategy will improve margins and
returns over the next 2 years. Second, new products and higher levels
of customer service will be delivered. Third, cost efficiencies from
the final year of the Business Efficiency Programme - boosted by
further profit improvement actions in the current year and beyond -
will be delivered in excess of original targets. These actions, in
combination, will put us in a strong position to compete successfully.
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
www.british-airways.com/investor.
GROUP BALANCE SHEET
September 30 March 31
(unaudited) (audited)
1999 £m 1998 £m 1999 £m
FIXED ASSETS
Tangible assets 10,015 9,180 9,839
Investments 398 367 402
10,413 9,547 10,241
CURRENT ASSETS
Stocks 85 89 84
Debtors 1,581 1,605 1,336
Cash, short-term loans and deposits 1,573 764 1,163
3,239 2,458 2,583
CREDITORS: AMOUNTS FALLING DUE
WITHIN ONE YEAR (3,264) (2,815) (3,081)
NET CURRENT LIABILITIES (25) (357) (498)
TOTAL ASSETS LESS CURRENT LIABILITIES 10,388 9,190 9,743
CREDITORS: AMOUNTS FALLING DUE
AFTER MORE THAN ONE YEAR
Borrowings and other creditors (6,492) (5,416) (6,230)
Convertible Capital Bonds 2005 (113) (126) (126)
(6,605) (5,542) (6,356)
PROVISIONS FOR LIABILITIES AND (33) (33) (32)
CHARGES
3,750 3,615 3,355
CAPITAL AND RESERVES
Called up share capital 270 263 268
Reserves 3,287 3,352 3,087
3,557 3,615 3,355
Non equity minority interest 193
3,750 3,615 3,355
STATEMENT OF TOTAL RECOGNISED GAINS AND Six months ended Year
LOSSES ended
September 30 March 31
(unaudited) (audited)
1999 £m 1998 £m 1999 £m
Profit for the period 218 347 206
Other recognised gains and losses
relating to the period
Exchange and other movements 13 (42) (82)
Total recognised gains and losses 231 305 124
These summary financial statements were approved by the Directors on
November 8, 1999.
GROUP CASH FLOW STATEMENT
Six months ended Year ended
September 30 March 31
(unaudited) (audited)
1999 £m 1998 £m 1999 £m
CASH INFLOW FROM OPERATING ACTIVITIES 681 605 1,241
DIVIDENDS RECEIVED FROM ASSOCIATES 11
RETURNS ON INVESTMENTS AND SERVICING OF (156) (137) (309)
FINANCE
TAXATION 7 (12) (40)
CAPTIAL EXPENDITURE AND FINANCIAL 25 (128) (118)
INVESTMENT
ACQUISITIONS AND DISPOSALS (21) (1) (6)
EQUITY DIVIDENDS PAID (188) (113) (113)
Cash inflow before management of liquid
resources and financing 348 214 666
MANAGEMENT OF LIQUID RESOURCES (393) (14) (363)
FINANCING 67 (190) (235)
Increase in cash in the period 22 10 68
GROUP FINANCING SURPLUS /(REQUIREMENT)
Cash inflow before management of liquid
resources and financing 348 214 666
Acquisitions under loans, finance leases
and (328) (629) (1,470)
hire purchase arrangements
Total financing surplus /(requirement)for 20 (415) (804)
the period
Total tangible fixed asset expenditure, net
of progress payment refunds 667 814 1,807
NOTES TO THE ACCOUNTS
For the period ended September 30, 1999
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, 1999 in accordance with all applicable United Kingdom accounting
standards and the Companies Act 1985 and are consistent with those
applied in the previous year.
The presentation of the Group's share of the results of associates
in the profit and loss account has been revised in accordance with
FRS9 - Associates and Joint Ventures. The diluted earnings per
share figures have been recalculated following the revisions to the
calculation in FRS14 - Earnings per Share.
Six months ended Year ended
September 30 March 31
1999 £m 1998 £m 1999 £m
2 RECONCILIATION OF OPERATING PROFIT
TO CASH INFLOW FROM
OPERATING ACTIVITIES
Group operating profit 211 435 442
Depreciation charges 314 307 619
Other items not involving the
movement of cash 21 (21) 21
(Increase)/decrease in stocks
and debtors (200) (205) 60
Increase in creditors 335 89 99
Cash inflow from operating
activities 681 605 1,241
3 RECONCILIATION OF NET CASH FLOW TO
MOVEMENT IN NET DEBT
Increase in cash during the period 22 10 68
Cash outflow from decrease in
debt and lease financing 130 197 300
Cash outflow from liquid resources 393 14 363
Change in net debt resulting from
cash flows 545 221 731
New loans and finance leases
taken out and hire purchase (328) (629) (1,470)
arrangements made
Conversion of Convertible Capital Bonds 13 24 24
Exchange movements (72) 37 (208)
Movement in net debt during the period 158 (347) (923)
Net debt at April 1 (5,526) (4,603) (4,603)
Net debt at period end (5,368) (4,950) (5,526)
Three months ended Six months ended
September 30 September 30
1999 £m 1998£m 1999 £m 1998 £m
4 OTHER INCOME AND CHARGES
Income from trade investments 1 2 2 2
Other 1 16 1 17
2 18 3 19
Other income and charges represented by:
Group 2 18 3 19
Associates
2 18 3 19
NOTES TO THE ACCOUNTS (continued)
For the period ended September 30, 1999
Three months ended Six months ended
September 30 September 30
1999 £m 1998 £m 1999 £m 1998 £m
5 PROFIT ON SALE OF FIXED ASSETS
AND INVESTMENTS
Net profit on sale of investment
in Galileo International Inc. 149
Net profit on disposal of other
fixed assets and investments 14 3 42 9
14 3 191 9
Represented by:
Group 10 3 187 9
Associates 4 4
14 3 191 9
6 INTEREST
Net payable:
Interest payable less amount 86 86 171 162
capitalised
Interest receivable (23) (18) (43) (38)
63 68 128 124
Retranslation charges/(credits)
on currency borrowings 59 67 (19)
122 68 195 105
Net interest payable represented by:
Group 118 64 191 100
Associates 4 4 4 5
122 68 195 105
7 TAXATION
No tax has arisen in the UK as a result of trading profits, and
profit on sale of investments in the period being covered by tax
losses brought forward. The tax charge for the period is
attributable to tax on overseas investments.
8 DIVIDENDS PAID AND PROPOSED
The amount charged to the profit and loss account includes £1
million in relation to 1998-99 final dividends paid to
Convertible Capital Bond holders(1997-98: £1 million), who
converted their bonds in June 1999, in accordance with the
terms of the bonds.
9 EARNINGS PER SHARE
Basic earnings per share are calculated on a weighted average
of 1,074,528,000 ordinary shares (September 1998:
1,046,245,000)as adjusted for shares held for the purposes of
employee share ownership plans including the Long Term
Incentive Plan. Diluted earnings per share are calculated on a
weighted average of 1,126,460,000 ordinary shares (September
1998: 1,121,412,000) after allowing for the conversion rights
attaching to the Convertible Capital Bonds and for adjustments
to income to eliminate interest payable on the Convertible
Capital Bonds.
The number of shares in issue at September 30, 1999 was
1,081,225,000 (September 30, 1998: 1,053,165,000; March 31,
1999: 1,073,167,000) ordinary shares of 25 pence each.
NOTES TO THE ACCOUNTS (continued)
For the period ended September 30, 1999
September 30 March 31
1999 £m 1998 £m 1999 £m
10 TANGIBLE ASSETS
Fleet 8,294 7,655 8,207
Property 1,419 1,261 1,331
Equipment 302 264 301
10,015 9,180 9,839
11 INVESTMENTS
Associated undertakings 341 300 323
Trade investments 32 67 68
Investment in own shares 25 11
398 367 402
12 CREDITORS: AMOUNTS FALLING DUE
WITHIN ONE YEAR
Loans 199 31 202
Finance leases 88 93 91
Hire purchase arrangements 273 222 264
560 346 557
Overdrafts - unsecured 6 19 11
Corporate taxation 37 59 25
Other creditors and accruals 2,661 2,391 2,488
3,264 2,815 3,081
13 BORROWINGS AND OTHER CREDITORS
FALLING DUE AFTER MORE THAN ONE
YEAR
Loans 980 981 940
Finance leases 1,520 1,008 1,244
Hire purchase arrangements 3,762 3,234 3,811
6,262 5,223 5,995
Corporate taxation 25
Other creditors and accruals 230 168 235
6,492 5,416 6,230
14 RESERVES
Balance at April 1 3,087 3,061 3,061
Retained profit for the period 161 293 15
Exchange and other adjustments 13 (42) (82)
Reduction in reserves resulting
from shares issued to a
Qualifying Employee Share
Ownership Trust in relation to (2) (21)
the 1993 Share Save Scheme
Net Movement on goodwill 7
Premium arising from issue of
ordinary share capital 21 40 114
3,287 3,352 3,087
15 The figures for the three months and six months ended September
30, 1998 and 1999 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, 1999 have been
extracted from the full accounts with certain minor
presentational changes 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 set out on page 2 and pages 7 to 11 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.
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 London Stock Exchange 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. A review consists
principally of making enquiries of the Group's 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 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 both the three months and six months ended September 30, 1999.
Ernst & Young
London
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, 1999.
The adjusted net income and shareholders' equity applying US GAAP are
set out below:
Three months ended Six months ended
September 30 September 30
1999 £m 1998 £m 1999 £m 1998 £m
Profit for the period as reported in
the Group profit and loss account 30 216 218 347
US GAAP adjustments 14 (28) (67) (42)
Net income as so adjusted to
accord with US GAAP 44 188 151 305
Net income per Ordinary
Share as so adjusted
Basic 4.1p 18.0p 14.1p 29.2p
Diluted 4.1p 17.0p 13.8p 27.6p
Net income per American Depositary
Share as so adjusted
Basic 41p 180p 141p 292p
Diluted 41p 170p 138p 276p
September 30 March 31
1999 £m 1998 £m 1999 £m
Shareholders' equity as reported
in the Group balance sheet 3,750 3,615 3,355
US GAAP adjustments (529) (492) (198)
Shareholders' equity as so adjusted
to accord with US GAAP 3,221 3,123 3,157
AIRCRAFT FLEET
Number in service with Group
companies at September 30, 1999
Operating
leases off Total
On balance balance sheet (see Future
MAINLINE sheet Exten- Note 2 deli-
(see Notes 1 & 6 Aircraft dible Other below) veries Options
below)
Concorde 7 7
Boeing 747-100 5 1 6
Boeing 747-200 13 3 16
Boeing 747-400 57 57
Boeing 777 28 28 17 16
Boeing 767-300 28 28
Boeing 757-200 47 3 3 53
Airbus A319 (see
Note 5 below) 39 129
Airbus A320 10 10 20
Boeing 737-200 16 16
Boeing 737-300 7 7
Boeing 737-400 22 12 34
Turbo Props
(see Note 3 below) 2 17 19
Embraer RJ145 7 14
Sub total 219 6 56 281 83 159
DEUTSCHE BA, AIR LIBERTE and 'go'
McDonnell Douglas
DC-10-30 3 3
McDonnell Douglas
MD83 3 7 10
Boeing 737-300 30 30 1
Fokker 100 4 7 11
Fokker F28 4 4
Turbo Props
(see Note 4 below) 1 1
Sub total 11 7 41 59 1
GROUP TOTAL 230 13 97 340 84 159
Notes:
1 Includes those operated by British Airways Plc, British Airways
(European Operations at Gatwick) Ltd and Brymon Airways Ltd.
2 Excludes 4 ATR 72s, 7 ATR 42s, 2 Embraer and 1 Boeing 737-200
subleased to other carriers.
3 Includes 2 de Havilland Canada DHC-7-100s and 17 de Havilland
Canada DHC-8s.
4 Excluding 1 ATR 72 and 1 ATR 42 stood down out of service.
5 Options include reserved delivery positions and, if taken, may be
A319, A320 or A321.
6 Excludes 5 McDonnell Douglas DC-10-30s and 2 Boeing 737-200s stood
down pending disposal or return to lessor.
7 Excludes 12 future deliveries and 12 options on A318s announced in
October.
Friday, 3rd January 2025
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