BBC Homepage World Service Education
BBC Homepagelow graphics version | feedback | help
BBC News Online
 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

The BBC's Simon Montague
"A clear sign of the move away from cost conscious travellers"
 real 56k

Monday, 6 November, 2000, 10:55 GMT
BA to sell Go airline as profits surge
BA planes lined up at an airport
BA: "Ruthless approach towards poorly performing routes or assets"
British Airways has announced plans to sell its no-frills airline Go, saying it wants to focus on the business it understands best, being a full-service carrier.

BA also announced a better-than-expected surge in profits, up by 125%, in a sign that the recovery of the much-troubled airline is well underway.

In the spring, the company sacked its chief executive Bob Ayling and replaced him with Australian Rod Eddington, as the airline plunged deep into the red.

Now the carrier is well back into profitablity, despite the pressure from high oil prices. Second-quarter operating profit rose to 264m ($383m) - up from 117m a year ago.

Analysts had expected profits of 140m-190m.

'Ruthless approach'

British Airways chief executive Rod Edddington
Rod Eddington wants to close unprofitable routes
Speaking to the BBC, Mr Eddington did not confirm newspaper reports that the airline planned to drastically cut its regional network in the UK.

However, in a company statement, he said the company would be "taking a ruthless approach towards poorly performing routes and assets".

"Those not adding value are being removed. It is imperative that each of our aircraft generates shareholder value," he said.

In the past year, BA has been hit by a series of setbacks including high fuel prices, the collapse of merger talks with Dutch carrier KLM, increased competition from low-cost airlines in Europe and the grounding of its fleet of Concorde aircraft.

It has even been damaged by its own low-cost operator, Go, which has competed with its parent on several European routes.

Go: Key facts
Started in 1998 with 25m
Flies to 20 destinations from London, Stansted
Main competitors include Ryanair and EasyJet
Valued by analysts at 300m
Analysts interpreted the latest figures as a sign that BA's new strategy focused on flying smaller planes with bigger proportions of higher-paying passengers was delivering results.

The airline's yield - a measurement of how much it makes on each passenger - increased 8.7% in the second quarter in its biggest ever year-on-year improvement.

Fuel costs were 61m more than in the corresponding period last year but unit costs overall were only 0.8% higher, BA said.

Shares rise

Mr Eddington said the results were "encouraging" but there were still challenges ahead for the airline.

The sale of Go forms part of plans to return BA's European operations to profitability after a loss of 310m last year.

BA's overall operations had posted their first loss since privatisation in 1987.

BA's shares responded positively to the results announcement, climbing 13 pence, or 3.9%, to 343p by 1050 GMT.

Search BBC News Online

Advanced search options
Launch console
See also:

15 Sep 00 | Business
Fuel costs push air fares up
24 Sep 00 | Business
BA turns spotlight on Swissair
21 Sep 00 | Business
Airlines end merger plans
07 Aug 00 | Business
British Airways seeks revival
23 May 00 | Business
Has BA turned the corner?
25 Apr 00 | Business
British Airways goes for Aussie
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories