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BA profits soar despite high fuel costs
British Airways saw pre-tax profits rise from £75 million to £124 million in the first quarter of the year.
In the three months ending June 30 the airline achieved an operating profit of £176 million against £129 million in the same period last year. The operating margin was up to 8.5% – still off the airline’s target of 10%.
The results came in the face of a 37.6% hike in fuel costs. The airline expects fuel costs to be about £525 million higher than last year.
The improved revenue was put down to more passengers flying in premium cabins.
BA also achieved record passenger loads in July – indicating that the short term impact of the London bombings was “not material”, according to chairman Martin Broughton.
But he added that it was too early to say what the long term impact will be.
“When taken together with the uncertain economic outlook and volatility in both fuel prices and the US dollar exchange rate, accurate forecasting is even more of a challenge than usual,” he said. “Market conditions, however, remain broadly unchanged.
“The continuing strength of the US dollar and increased surcharges have improved the revenue outlook. We now expect total revenue for the year to March 2006 to grow by 5.5-6.5%. Capacity and volume are still expected to increase by about 3% with total yield flat.
“We now expect fuel costs, net of hedging, to be about £525 million more than last year, a further increase of £75 million, larely driven by the stronger US dollar.”
Broughton paid tribute to outgoing chief executive Sir Rod Eddington, who is to hand over to former Aer Lingus boss Willie Walsh, saying BA had become a “leaner and much more robust company” under his leadership.
Report by Phil Davies
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