British Airways said it is facing ongoing difficult trading conditions, but is still upbeat about its future as fuel cost remain under control and Terminal 5 is performing “extremely well”.
In a trading statement, BA said the fuel bill for the year is still expected to be some £3 billion as exchange and hedging have offset lower fuel prices. The fuel hedge position remains largely unchanged from the last guidance and therefore the group is “well placed to benefit from falling fuel prices going into next year”.
In October 2008, passenger capacity, measured in available seat kilometres, was 0.7 percent below the same month a year earlier, while traffic, measured in revenue passenger kilometres, was down 4.4 percent. This resulted in a passenger load factor decrease of 3.0 points versus last year, to 77.0 per cent. Cargo, measured in cargo tonne kilometres, fell by 4.2 percent.
Costs in the six months ended September 30, 2008, were up £711 million from a year earlier and remain a key challenge, it said. BA is conducting a major review to simplify the business, reduce costs and remain competitive, which includes the cancellation and deferral of significant projects and the closure of its Glasgow cabin crew base.
With the management restructuring, which will see roughly a third of the 1,350 eligible managers take voluntary severance by the end of December, BA has reviewed projects both underway and planned and has revised its capital expenditure forecast to £550 million from £650 million for the year.
BA said its financial position remains strong with the cash level at the end of September unchanged from March at £1.8 billion. Net debt was £1.4 billion, in line with the same time last year.
British Airways' chief executive Willie Walsh said: “This is a good performance given the incredibly difficult trading conditions. The six month period will be remembered as one of the bleakest on record. The period was hit by a crisis in the banking sector, record fuel prices and several airlines going out of business.
'Against this very tough economic backdrop we have delivered profits of £140 million resulting from a 6.4 per cent revenue increase,” he added.
Terminal 5, which opened earlier this year with massive teething problems, “is proving to be the genuine asset that we always expected it to be, Walsh said.
“Transfer passenger connections are faster with 90 percent of our Heathrow flights now under one roof. We have now moved to full operations at Terminal 5 and it is delivering real customer benefits.”
Overall, BA now expects full-year revenue to grow by at least 4 percent, an increase on its previous guidance of a 3 percent year–on-year increase.