5th Aug 2005 07:00
British Airways PLC05 August 2005 GOOD Q1 RESULTS • Pre-tax profit of £124 million • Operating profit of £176 million • Operating margin of 8.5 per cent • Revenue up 8.3 per cent to £2.1 billion • Net unit costs improve 0.1 per cent • Net debt down at £2.5 billion British Airways today reported its quarterly financial results for the periodending June 30th, 2005, prepared under International Financial ReportingStandards (IFRS). All comparative results are also reported under IFRS. The airline reported a pre-tax profit of £124 million (2004: £75 million profit)for the first quarter to June 30, 2005. The operating profit for the first quarter was £176 million (2004: £129 millionprofit) delivering an operating margin of 8.5 per cent (2004: 6.8 per cent). Sir Rod Eddington, British Airways' chief executive, said: "These are goodresults despite a 37.6 per cent increase in fuel costs. The improvement in passenger revenue is driven by more customers flying in the premium cabins. "We continued to improve the service we offer to our customers. Onlinecustomers can now book hotels, car hire and sightseeing tours on ba.com, as wellas flights, in a single transaction. Online boarding passes are now accepted at53 airports and the use of e-tickets continues to rise with 94 per cent of ourcustomers using them on eligible routes. "We began new services to Shanghai, announced plans to increase flights to Indiaand will next year add four new European destinations to our network. We havefitted our award winning Club World flat beds on four Boeing 767s. We haveimproved our Skyflyers service for families with a refurbished lounge atHeathrow Terminal 1. We were also delighted to back the winning bid to stagethe Olympics in London in 2012. "Finally, these are my last quarterly financial results at the airline and Iwould like to thank our staff for their support during the last five years.Their commitment to rebuilding our business has helped return British Airways tothe top of the airline operating profit league table. "There is still much work to be done to achieve a 10 per cent operating marginand I am confident that under Willie Walsh's leadership, our people willcontinue to rise to the challenge." Martin Broughton, British Airways' chairman, said: "Record passenger loads inJuly indicate that the short term impact of the London bombings was not materialalthough it is too early to say what the long term impact will be. When takentogether with the uncertain economic outlook and volatility in both fuel pricesand the US Dollar exchange rate, accurate forecasting is even more of achallenge than usual. Market conditions, however, remain broadly unchanged. "The continuing strength of the US Dollar and increased surcharges have improvedthe revenue outlook. We now expect total revenue for the year to March 2006 togrow by 5.5 - 6.5 per cent. Capacity and volume are still expected to increaseby about 3 per cent with total yield flat. "We now expect fuel costs, net of hedging, to be about £525 million more thanlast year, a further increase of £75 million, largely driven by the stronger USDollar." In a tribute to Sir Rod Eddington, he added: "British Airways has become aleaner and more robust company under Rod's leadership, with a loyal, motivatedworkforce. His legacy is the culture change he has introduced across thecompany, in particular, the widespread acceptance and understanding of the needto achieve a 10 per cent operating margin." Passenger capacity, measured in available seat kilometres (ASKs), increased by1.5 per cent for the quarter and revenue passenger kilometres (RPKs) were up 2.5per cent. Seat factor was up 0.7 points at a record 75.6 per cent in thequarter. Yield measured as pence per RPK increased by 1.5 per cent - driven by morepremium traffic. Cargo volumes, measured in cargo tonne kilometers (CTKs), were down 2.6 per centcompared with last year, with yields up 2.7 per cent. Overall load factor was69 per cent, down 0.2 points on last year. Total costs were up by 6.2 per cent largely driven by a 37.6 per cent increasein the cost of fuel. Selling costs reduced by 21.7 per cent due to travelagents' commission restructuring and increased online sales. Net unit costsimproved by 0.1 per cent in the same period. Employee costs rose 5.4 per cent reflecting wage awards and increased pensioncosts, only partially offset by manpower reductions. Revenue in the quarter, at £2.1 billion, was up 8.3 per cent. Net debt was£2,527 million, down £395 million since the start of the financial year. ends August 5, 2005 075 /KG/05 Notes to Editors • Plans for new European routes from Gatwick include Grenoble this year and Tirana, Varna, Izmir and Reykjavik next year. • For all periods up to and including March 2005, British Airways has previously prepared its Group financial statements under UK Generally Accepted Accounting Practice (UK GAAP). • British Airways restated its 2004/05 accounts to International Financial Reporting Standards (IFRS). The restated accounts were published on July 4, 2005. All comparators referred to are based on these restated accounts. A webcast of British Airways' conference call to city analysts can be accessedvia the internet www.bashares.com - on Friday, August 5 at 2pm. Certain information included in this statement is forward-looking and involvesrisks and uncertainties that could cause actual results to differ materiallyfrom those expressed or implied by the forward looking statements. Forward-looking statements include, without limitation, projections relating toresults of operations and financial conditions and the Company's plans andobjectives for future operations, including, without limitation, discussions ofthe Company's 'Future Size and Shape' programme, expected future revenues,financing plans and expected expenditures and divestments. All forward-lookingstatements in this report are based upon information known to the Company on thedate of this report. The Company undertakes no obligation to publicly update orrevise 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 specificevents that could cause the Company's forward looking statements to be incorrector that could otherwise have a material adverse effect on the future operationsor results of an airline operating in the global economy. Information on somefactors which could result in material difference to the results is available inthe Company's SEC filings, including, without limitation the Company's Report onForm 20-F for the year ended March 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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