British Airways (BA) glided back into a profitability at the half-year stage, after a pick-up in premium passengers combined with the airline's reduced capacity to drive the operating margin up to 6.7 per cent. That comes just before completion of BA's merger with Spanish carrier Iberia. And there are even signs of a truce emerging with the company's militant cabin crew.
BA was helped by fairly stable total non-fuel running costs of £4.15bn - 1.5 per cent better than last year's outcome. Fuel costs did rise in the period, by 25.7 per cent to an average price of 216.7¢ (136p) a gallon, but this was held in check by effective hedging arrangements. Most notably, the cargo performance improved strongly - cargo tonne kilometres grew 2.4 per cent on last year's nadir, to 2.29m. Although cargo revenue, measured per kilometre, was still 4.3 per cent lower year on year. And the passenger load factor, which measures average cabin occupancy across the fleet, was 1.4 percentage points lower than last year's outcome at 79.2 per cent.
BA's statement didn't elaborate on whether the company and its unions are close to resolving their differences, but reports in recent weeks suggest that management may restore some of the travel privileges summarily removed from senior striking cabin crew. Still, chief executive Willie Walsh didn't concede any ground on the need for fundamental reform. Indeed, new crews employed on different terms and conditions from the existing workforce - a major source of friction with the unions - are ready to start crewing planes. Redundancy payments and restructuring costs totalled £18m in the period.
Brokers are likely to upgrade their estimates but, prior to these figures, Charles Stanley was expecting a £4.6m pre-tax loss for the full year, rising to a £408m profit in 2012, with EPS of 23.8p.
BRITISH AIRWAYS (BAY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 272p | MARKET VALUE: | £3.14bn | |
| TOUCH: | 271-272p | 12-MONTH HIGH: | 290p | LOW: 172p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 181p | NET DEBT: | 90% | |
| Half-year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 4.10 | -292 | -18.8 | nil |
| 2010 | 4.45 | 158 | 9.3 | nil |
| % change | +9 | - | - | - |
Ex-div: - Payment: - | ||||
