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Rising passenger numbers boost BA profits

04/08/2006

British Airways (BA) has reported a 57 per cent increase in first quarter profits, as rising passenger numbers combat the increasing cost of aviation fuel.

Europe's third-largest airline said that pre-tax profits in the three months to June 30th reached £195 million, up from £124 for the same period in 2005.

While the price of fuel was up 44 per cent to £512 million over the period, BA said that the total number of passengers it carried in the first quarter rose by 4.9 per cent to 9.6 million, helping to offset rising operating costs.

The company expects fuel costs for the year to be around £550 to £600 million higher than last year.

Costs excluding fuel are also anticipated to be slightly higher, rather than flat as previously predicted, due to a £2.1 billion deficit in BA's pension scheme.

BA was able to boost short-haul passenger numbers over the quarter by introducing new low fares, whilst simultaneously increasing its profits margin to 9.1 per cent, up from 8.5 per cent during the same period in 2005.

Commenting, BA chief executive Willie Walsh said: "These are good results driven by strong revenue as a result of record seat factors and better cabin mix."

"On shorthaul our new low fares have been a big success. While competition in this market is brutal I am delighted to see we are winning customers with record seat factors."

"We're now even more competitive on price whilst keeping ahead of the game by offering full service flights, more frequently to more convenient airports," added Mr Walsh in a dig at rival no-frill airlines.

Despite the welcome increase in profits, BA's first quarter performance is overshadowed by ongoing investigations by US and UK regulators into alleged cartel activity and price-fixing by the company on transatlantic routes.

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