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Last Updated: Monday, 9 February, 2004, 09:56 GMT
British Airways profits surge
British Airways
BA has cut jobs since 11 September
British Airways has posted a big jump in quarterly profits and says it has turned the corner from the industry's downturn.

BA posted pre-tax profit of 125m ($231m) for the final three months of 2003, up from 25m a year earlier.

BA is pushing through a sweeping restructuring which involves cutting thousands of jobs.

BA chief executive Rod Eddington said the airline had "survived the most testing period in aviation history".

It was the airline's biggest third-quarter profit in 12 years.

But there is a snag. The figures do not include January 2004, when the airline faced a lot of disruption on transatlantic flights because of the threat of terrorist attacks, so its next set of figures may not be as good.

Security worries

BA chairman Lord Marshall acknowledged that security issues were having some impact on forward bookings.

But BA underlined its recovery after several years of belt tightening to reshape the business.

"These are good results and a significant improvement on last year. They show what can be achieved when we are focused on our cost targets," said Mr Eddington.

Last month, BA unveiled plans to cut costs by 300m over the next two years, including about 3,000 job cuts.

It was the latest move in a programme of cut backs totalling 1.7bn.

The company added its cost cutting campaign, including the latest cuts in its 2004/06 business plan, remained "central to sustained profitability".

But, despite the job losses, employee costs still increased by 0.6% over the three months as manpower reductions were offset by wage and National Insurance increases.

Cutbacks

The weakness of the US dollar also cost the firm an additional 27m, BA added.

But the moves had allowed the firm to cut its debts by to 4.5bn - down 2.1bn from its December 2001 peak.

Mr Eddington said: "We know we have got to take more out of our cost base and we know we can't do it unless we find a sensible way with our staff to do it."

The airline said sales of long haul tickets for premium seats had recovered and remain higher than the previous year's levels.

However, demand for short-haul premium tickets "remains weak", Lord Marshall said.

But the group still saw sales rise by 1.8% to 1.89bn on the back of the gradual recovery in demand for air travel, a better economic outlook and cheap ticket offers to encourage travel.

BA faces tough competition from the budget airline sector for business travellers on European routes.




SEE ALSO:
BA slashes another 300m in costs
28 Jan 04  |  Business
Investors latch onto BA revival
07 Jan 04  |  Business
UK and French flights 'targets'
31 Jan 04  |  Americas


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