British Airways Reports 88 Percent Drop in Profits

British Airways presented its interim management statement last week for the nine months ended Dec. 31, 2008. It reported an operating profit of £89 million, compared to £744 million in 2007, a drop of 88 percent. It reported a loss before tax of £70 million, compared to a profit of £816 million in 2007. Revenues were £7.046 billion, compared to £6.634 billion in 2007, up 6.2 percent. Fuel costs were up 48.4 percent to £2.244 billion.

Revenue at £6.2 billion was up 6.6 percent on capacity (measured in ASKs) up 0.2 percent. Yields were up 9.6 percent, due to a 4.2 percent benefit from exchange, price increases of 5 percent (including a 1.4 percent benefit from a change in estimation basis for outdated tickets) and a positive mix impact of 0.4 percent. Seat factor was down 2.3 points to 78.4 percent as the current economic downturn continues to impact volumes.

Total group operating costs were up 18.1 percent, with unit costs up 20.4 percent, due to the dramatic increase in fuel costs and weakening sterling. The average market price of fuel, measured in U.S. dollars, was up 40.7 percent over the same period last year. The company’s fuel bill was up 48.4 percent, despite a fuel hedging profit of £194 million, reflecting the collapse of sterling against the dollar.