19th May 2006 07:01
British Airways PLC19 May 2006 IMPROVED REVENUE DRIVES GOOD RESULTS • Pre-tax profit of £620 million• Operating profit of £705 million• Net costs up 2.9 per cent• Unit costs up 0.5 per cent• Net debt at £1.6 billion British Airways today announced a pre-tax profit of £620 million for the year toMarch 31, 2006 (2005: £513 million profit). The pre-tax profit for the fourthquarter was £91 million (2005: £6 million loss). Operating profit for the year was £705 million (2005: £556 million profit) and£93 million for the quarter (2005: £46 million profit). The operating marginwas 8.3 per cent (2005: 7.2 per cent) and 4.4 per cent in the quarter (2005: 2.5per cent). Net debt at £1.6 billion fell by £1.3 billion during the year, a £5 billionreduction since its December 2001 peak. Operating cashflow was £1.3 billion, anincrease of £334 million. Willie Walsh, British Airways' chief executive, said: "These are good resultswith revenue performance driven by improvements in seat factors and yield. "We achieved an operating margin of 8.3 per cent and as a result all our staffwill share in a £48 million bonus. We remain committed to our goal of reachinga 10 per cent margin by 2008. Our shorthaul business is now in profit for thefirst time in 10 years but we have still more to do. "Total costs, however, are up 8.2 per cent with fuel and employee costs achallenge. Our annual fuel bill rose by 44.7 per cent to £1.6 billion.Employees costs were up 5.0 per cent. "The accounting deficit in the New Airways Pension Scheme (NAPS) is up by £101million to £2.1 billion, despite the company's increased contributions andequity markets at a five year high. We have announced our proposal to tacklethe pension deficit and I am pleased with the dialogue we have had with staff,trustees and trade unions on this vital issue. "Self-service check-in, both online and at airport kiosks, has been very wellreceived by our customers. We continue to enhance and develop new products and,this summer, we will upgrade our inflight entertainment and introduce our newClub World flat bed." Martin Broughton, British Airways' chairman, said: "Market conditions remainbroadly unchanged. For the year to March 2007 total revenue is expected toimprove by 5-6 per cent, up from a previous estimate of 4-5 per cent, due to theimpact of the latest fuel surcharges and increases in seat factor. Capacity isexpected to increase by 2.5-3 per cent, with a small decline in yields,excluding fuel surcharges. "As previously stated, fuel costs, net of hedging, are expected to be about £600million more than last year, up from our previous guidance of £400 million, dueto the recent strong rise in fuel prices. Costs, excluding fuel, are expectedto be unchanged." Group turnover for the year was £8,515 million, up 9.6 per cent on a flyingprogramme 2.4 per cent bigger in available tonne kilometers (ATKs). For thequarter, group turnover was up 13.2 per cent at £2,122 million on a flyingprogramme 2.2 per cent higher in ATKs. Revenue passenger kilometres (RPKs) were up 3.7 per cent for the year and up by2.8 per cent for the quarter. Seat factor was up 0.8 points for the year at arecord 75.6 per cent and up 0.1 points in the quarter to 73.1 per cent. Yields,excluding fuel surcharges, were up 1.3 per cent for the year and up 3.7 per centfor the quarter. Net costs for the year were up by 2.9 per cent and unit costs worsened by 0.5per cent. In the quarter, net costs and unit costs were up 4.1 per cent and 1.8per cent respectively. For the year, cargo volumes measured in cargo tonne kilometers were down 0.4 percent compared with last year, with yields up 3.8 per cent. For the quarter,cargo volumes were up 2.1 per cent compared with last year, with overall loadfactor up 0.3 points at 68.5 per cent and yields were up, excluding fuelsurcharges at 8.3 per cent. The Board has recommended that no final dividend be paid. ends May 19, 2006 038/KG/2006 Notes to editors: • The airline's employee reward plan is a bonus arrangement fornon-management staff linked to the full year operating margin. The company hadto achieve an operating margin of 8.0 per cent after the cost of bonusarrangements to trigger a bonus of one week's pay, with a minimum payment of£500 for UK staff. After adjustment to cover the cost of the bonusarrangements, the operating margin for the year was 8.3 per cent and thistriggered bonuses of 1.15 weeks' pay for all non-management staff with a minimumpayment of £575. This is adjusted for overseas staff and pro-rated for parttime employees. • For all periods up to and including March 2005 British Airways haspreviously prepared its Group financial statements under UK Generally AcceptedAccounting Practice (UK GAAP). • British Airways restated its 2004/05 accounts to InternationalFinancial Reporting Standards (IFRSs). The restated accounts were published onJuly 4, 2005. All comparators referred to are based on these restated accounts. • The NAPS accounting deficit is now measured under IAS19. A webcast of British Airways' presentation to city analysts at 9am BST and theanalysts conference call at 2pm BST can be accessed via the internet onwww.bashares.com on Friday, May 19. 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, expected futurerevenues, financing plans and expected expenditures and divestments. Allforward-looking statements in this report are based upon information known tothe Company on the date of this report. The Company undertakes no obligation topublicly update or revise any forward-looking statement, whether as a result ofnew 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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