BA flies back in to profit

British Airways has been helped by cutting capacity

British Airways (BA) has continued its return to form after its recent financial turbulence, and heralded the return of Concorde to help accelerate future growth.

The airline reported pre-tax profits for the last three months of 2000 of £65m - compared to a £60m loss for the same period a year earlier.

"In a competitive market place, (the profit figures) show that we can continue to improve profitability by focusing on our core activities and the right network," said Rod Eddington who was brought in as chief executive following the poor financial performance a year ago.

The improvements followed a restructuring programme which involved big job cuts and a strategy to cut back unprofitable routes.

For the last nine months of the year, the company's profits rose almost 20% to £215m, while operating profits more than doubled to £441m.

More business class

BA is increasingly focusing on offering more profitable services aimed at business customers.

BA's Concorde fleet: back in action in 2001

Indeed, the airline's passenger yield - that is profit per passenger - rose 8.3% during the last three months of 2000 after a whole year of steady rises.

The strength of the performance surprised analysts.

Sales rose to £7.16bn during the third quarter of the year from £6.83bn a year earlier, despite a 3.9% reduction in overall capacity.

Concorde to return

BA expects to get an upgraded Concorde back on duty later this year, following a £31m redevelopment programme Mr Eddington said.

The airline is spending £17m enhnancing safety enhancements, and £14m on interior improvements.

"We are making sure that when Concorde does come back the product is substantially enhanced," Mr Eddington said.

"There's been quite a bit of activity going on to make sure the new Concorde interiors look good."

Strategy shift

BA grounded its fleet of the supersonic jets in August, over safety concerns raised following the crash in Paris in July when all 100 passengers and nine staff on an Air France Concorde died.

BA expects the Civil Aviation Authority in the UK to reissue Concorde's airworthiness certificate following safety improvements to the aircraft's fuel tanks.

The relaunch of Concorde will develop the firm's strategy of targeting more wealthy travellers.

BA is also pulling out of the cut-throat low-cost airline market.

It is currently in talks with six possible buyers for its no frills airline Go, which was put up for sale in November, and expects to find a buyer "within months".

Share price recovery

BA's share price stood 35p lower, or 7.7%, lower at 422.5p in afternoon trading despite revealing figures which exceeded City expectations.

But the stock had climed 15% since the beginning of the year in anticipation of encouraging figures.

BA's shares have had a rocky ride in recent years.

In 2000, the stock twice fell to about 260p - a third of its value in early 1997 when a share in the company was worth more than 750p.

But the stock price has recovered under Mr Eddington's leadership and it is now at a level not seen since the spring of 1999.