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Last Updated: Friday, 3 February 2006, 15:56 GMT
Passenger growth boosts BA profit
Tailfins of BA planes
BA has been advertising heavily
British Airways (BA) has seen third-quarter profits climb, helped by a pick up in passenger numbers, increased advertising and new routes.

One of the world's biggest airlines, BA said pre-tax profit increased by 8% to 164m ($291m) during the three months ending 31 December from a year earlier.

BA has been looking at ways of cutting costs and offsetting higher fuel costs.

"Significant" promotions helped boost its premium service, while BA also added new routes to India and Shanghai.

BA shares were trading 2% lower at 317.50 pence, reversing earlier gains.

Analysts said that despite the climb in earnings, concerns remained particularly relating to the size of the company's pensions deficit and the development of Terminal 5 at Heathrow.

'Strengthening the business'

The growth in passenger numbers helped lift third quarter sales by 9% to 2.13bn. Operating profit was 175m in the three month period, topping market expectations.

Fuel costs increased by 28.2% due to the increase in fuel price net of hedging, a larger flying programme and a stronger US dollar
Martin Broughton, BA chairman

"These are encouraging results which reflect better revenue and the continued efforts of our people to strengthen the business," said Willie Walsh, BA's chief executive.

The trend looks to be continuing with BA also reporting a 3.3% rise in January passenger traffic.

However, chairman Martin Broughton warned that: "Despite the improved revenue outlook, market conditions remain broadly unchanged as significant promotional activity is required to maintain seat factors."


Like many airlines BA was hit by increased energy costs around the globe.

Mr Broughton added: "Fuel costs increased by 28.2% due to the increase in fuel price net of hedging, a larger flying programme and a stronger US dollar."

BA's nine-month profits were up by 2% to 529m.

The company said that it would look to keep cutting costs, and would focus on its pensions shortfall.

"Tackling our pension deficit is a major part of making our cost base more competitive," the company said.

"We have come to the end of a staff awareness programme on the implications of the significant deficit and we are reviewing the feedback before starting consultation with the trades unions and trustees by the end of March," it added.

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