British Airways yesterday announced a pre-tax profit of £620 million for the year to March 31, 2006 (2005: £513 million profit). The pre-tax profit for the fourth quarter was £91 million (2005: £6 million loss).
Operating profit for the year was £705 million (2005: £556 million profit) and £93 million for the quarter (2005: £46 million profit). The operating margin was 8.3 per cent (2005: 7.2 per cent) and 4.4 per cent in the quarter (2005: 2.5 per cent).
Net debt at £1.6 billion fell by £1.3 billion during the year, a £5 billion reduction since its December 2001 peak. Operating cashflow was £1.3 billion, an increase of £334 million.
Willie Walsh, British Airways' chief executive officer, said: "These are good results with revenue performance driven by improvements in seat factors and yield".
Mr Walsh announced that BA staff will be sharing a £48 million bonus as a result of achieving an operating margin of 8.3 per cent. "We remain committed to our goal of reaching a 10 per cent margin by 2008," he said, adding that BA's shorthaul business is now in profit for the first time in 10 years.
"Total costs, however, are up 8.2 per cent with fuel and employee costs a challenge. Our annual fuel bill rose by 44.7 per cent to £1.6 billion. Employees costs were up five per cent," Mr Walsh said.
The accounting deficit in the New Airways Pension Scheme (NAPS) is up by £101 million to £2.1 billion, despite the company's increased contributions and equity markets at a five year high. The company is proposing to tackle the pension deficit and Mr Walsh said he was pleased with the dialogue we have had with staff, trustees and trade unions on this vital issue.
"Self-service check-in, both online and at airport kiosks, has been very well received by our customers. We continue to enhance and develop new products and, this summer, we will upgrade our inflight entertainment and introduce our new Club World flat bed," he said.
Martin Broughton, British Airways' chairman, said: "Market conditions remain broadly unchanged. For the year to March 2007 total revenue is expected to improve by five to six per cent, up from a previous estimate of four to five per cent, due to the impact of the latest fuel surcharges and increases in seat factor. Capacity is expected to increase by 2.5 to three per cent, with a small decline in yields, excluding fuel surcharges".
Mr Broughton also pointed out that fuel costs, net of hedging, are expected to be about £600 million more than last year, up from the company's previous guidance of £400 million, due to the recent strong rise in fuel prices. He said costs, excluding fuel, are expected to be unchanged.
Group turnover for the year was £8,515 million, up 9.6 per cent on a flying programme, 2.4 per cent bigger in available tonne kilometres (ATKs). For the quarter, group turnover was up 13.2 per cent at £2,122 million on a flying programme 2.2 per cent higher in ATKs.
Revenue passenger kilometres (RPKs) were up 3.7 per cent for the year and up by 2.8 per cent for the quarter. Seat factor was up 0.8 points for the year at a record 75.6 per cent and up 0.1 points in the quarter to 73.1 per cent. Yields, excluding fuel surcharges, were up 1.3 per cent for the year and up 3.7 per cent for the quarter.
Net costs for the year were up by 2.9 per cent and unit costs worsened by 0.5 per cent. In the quarter, net costs and unit costs were up 4.1 per cent and 1.8 per cent respectively.
For the year, cargo volumes measured in cargo tonne kilometers were down 0.4 per cent compared with last year, with yields up 3.8 per cent. For the quarter, cargo volumes were up 2.1 per cent compared with last year, with overall load factor up 0.3 points at 68.5 per cent and yields were up, excluding fuel surcharges at 8.3 per cent.
The board has recommended that no final dividend be paid.