Premium passenger revival gives BA a lift: Figures pushed up nearly 40% despite exchange rate effect

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The Independent Online
STRONG recovery in business and first-class travel helped British Airways' pre-tax profit to rise by 39.7 per cent to pounds 88m in the first quarter. Premium passenger traffic grew by 12 per cent over the same period last year without significant discounting.

The number of passengers carried increased by 6.9 per cent, with 8.3 million travelling on scheduled and charter flights. Cargo carried rose by almost 20 per cent to 171,000 tonnes, the result of increased economic activity and more freighter capacity.

Turnover rose by 11.4 per cent to pounds 1.69bn from pounds 1.5bn a year earlier. Earnings per share were flat at 6.9p following the issue of more shares last year. The figures were slightly short of the more bullish predictions by analysts and the shares fell 12p to close at 417p.

BA said the results were hit by the impact of weaker sterling on costs including fuel. Engineering and other costs, including payment for the use of some USAir aircraft and staff under the BA brand, rose by 42.7 per cent. These costs would even out over the year.

Landing fees and air traffic control costs also rose in line with increases in activity. The number of employees went up by 2.6 per cent to 50,768 and productivity was up by 4.7 per cent.

USAir, in which BA has a 25 per cent stake, continued to suffer from severe price-cutting. BA recently warned that it might write off its dollars 400m investment in the airline if it failed to win cost-cutting concessions from employees.

Sir Colin Marshall, chairman, said the rate of progress was not encouraging but the alliance would generate pounds 70m of operating profits for BA this year.

Last week the USAir pilots' union offered to accept wage cuts and changes in working practices in exchange for a 25 per cent share of the company and three seats on the board. The unions' plan also envisaged a dollars 450m investment by BA, but the British company said yesterday there would be no further investment until USAir completed its restructuring.

BA is considering what action it will take over the approval last month by the European Commission of pounds 2.3bn in aid for Air France. The group is believed to be talking to British Midland and KLM and the three may take legal action once they have seen the commission's detailed decision.

(Photograph omitted)

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