British Airways Posts First Profit in Two Years
“Our concerted efforts to introduce permanent structural change across the airline has led to a reduction in non-fuel costs and a return to profitability. Revenue has increased, driven primarily by yield improvements and, while fuel costs have risen, they are in line with our expectations,” BA’s chief executive Willie Walsh said.
In 2009, BA recorded a loss of $468 million in the same period as it was immersed in the recession. The profit announced was better that the expected $120 million. The company said that the profit was possible thanks to cots being down by 1.5 percent and revenue increased up to $553 million due to improved yields.
“Our focus on permanent structural change will continue. This summer we agreed a new productivity deal with our Heathrow terminal-based staff that will provide a more flexible, cost-efficient and customer focused ground operation. In addition, the first of the cabin crew recruited on new terms and conditions have completed training and start flying on Monday,” the BA executive said.
British Airways’ recovery came at a time in which the air carrier is about to complete its merger with Spain’s Iberia next January as part of a transatlantic joint business that involves American Airlines as well.
“At a strategic level, we launched our transatlantic joint business with American Airlines and Iberia earlier this month, having received regulatory approval in the summer. Also, we expect to complete our merger with Iberia in January 2011,” Walsh added.
Total revenue for the period was up 8.4 percent. Passenger revenue was up 7.9 percent as yields improved by 17.2 percent. The cargo division of BA continues to register strong performances as revenue increased by 39.4 percent due to yields recovering from the market low point of 2009, as well as strong premium product performance and higher fuel surcharges.
The period’s results along with BA’s share of movements in associates reserves have increased reserves by $277 million to $1.38 billion. The market movement on fuel and cash flow hedges was not a factor during the period.