BA shows sharp rise in profits

British Airways today showed its fortunes were turning around as it reported a sharp increase in profits over the last three months.

Pre-tax profits for the three months to September 30 rose to £245 million, against £5 million for the same period the previous year, after aggressive cost-cutting measures fed through.

BA added that in the absence of war or terrorist action it was expecting to report a full-year profit this year.

BA has been hit hard by the slump in demand for air travel following the September 11 terrorist attacks last year and has also faced intense competition from budget airlines such as Ryanair and easyJet.

In May it reported its worst set of results since privatisation 15 years ago, with full-year losses of £200 million.

Shares slid on the back of the poor trading environment and in September the group was demoted from the prestigious FTSE 100 Index.

To cope with the devastating slide in demand for air travel following the US terrorist attacks, BA cut routes and capacity, slashed jobs and announced an overhaul of its business.

The group, which employs 47,000 staff, has cut about 8,000 jobs since August 2001. It is aiming to reduce staff by 10,000 this financial year and 13,000 by March 2004.

Three months ago British Airways showed its aggressive cost cuts were working, with pre-tax profits rising to £65 million for the three months to June, against the £40 million recorded in the same period in 2001.

But the BA chief executive Rod Eddington cautioned at the time that there was still a "long way to go".