BA attacks APD as it returns to profit

British Airways attacked next week’s hike in Air Passenger Duty as it posted its first profit for two years.

The carrier reported a return to the black in the six months to September 30.

BA recorded a pre-tax profit of £158 million against a loss of £292 million in the same period last year. Pre-tax profit of £322 million was recorded in the second quarter.

While no mention was made of ongoing efforts to resolve the long running cabin crew dispute, BA stressed that it would continue to focus on “permanent structural change”.

“Our achievement to date in introducing structural change, leading to a more competitive cost base, has enabled us to grow our business in a way that would not have been profitable previously,” the airline said.

Referring to the rise in APD, BA said: “Next week there are further increases in APD of up to 55% on some long haul flights.

“We already meet our carbon costs twice over even before these increases.

“Aviation supports more than 500,000 jobs in the UK and provides the transport links that are vital to the success of UK businesses in a globalised economy.

“Excessive taxation puts aviation’s social and economic benefits at risk.”

BA achieved a second quarter operating profit of £370 million against a loss of £17 million in the equivalent period last year.

Looking forward, BA said the situation was positive but “while the economic environment continues to be subject to uncertainty…the increase in APD is unhelpful. We continue to focus on managing our costs.

Chief executive Willie Walsh said: “Our concerted efforts to introduce permanent structural change across the airline has led to a reduction in non-fuel costs and a return to profitability. Revenue has increased, driven primarily by yield improvements and, while fuel costs have risen, they are in line with our expectations.

“Our focus on permanent structural change will continue. This summer we agreed a new productivity deal with our Heathrow terminal-based staff that will provide a more flexible, cost-efficient and customer focused ground operation.

“In addition, the first of the cabin crew recruited on new terms and conditions have completed training and start flying on Monday.

“At a strategic level, we launched our transatlantic joint business with American Airlines and Iberia earlier this month, having received regulatory approval in the summer. Also, we expect to complete our merger with Iberia in January 2011. Regulatory information about the merger has been sent to shareholders in advance of shareholder meetings on November 29 to seek approval for the merger.

“Despite disruption caused by numerous air traffic control strikes across Europe this summer, 74% of our Heathrow flights and 84% of our Gatwick flights departed on time, significantly outperforming our major competitors.”

Total revenue for the period was up 8.4%, BA said with passenger revenue up by 7.9% on capacity down by 6.2%. Yields improved by 17.2% driven by price and mix across all cabins.

Operating costs were cut by 1.5% while fuel costs rose by 2.4%.






Share article

View Comments

Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.