BRITISH Airways has warned of further hits to its bottom line as fuel and pension costs continue to rise.
The carrier, which posted £195 million in pre-tax profits for the first quarter to June 30, said its capacity growth will be reduced through the winter as it faces rising costs.
Chairman Martin Broughton said: “Capacity growth in the first half of the financial year is expected to be about four per cent, slowing in the second half of the year to achieve a full year increase of 2.5 to three per cent.
“Fuel costs for the year are now expected to be £550-£600 million up on last year. Costs excluding fuel, which were previously forecast flat, are now expected to be slightly higher this year as pensions are driving up employee costs.”
Chief executive Willie Walsh added: “Total costs are up, with fuel up 44% at £512 million. Employee costs are up seven per cent, which reflects increased pension costs as a result of the £2.1 billion accounting deficit in our New Airways Pension Scheme.”
However, Walsh said a better mix of seats and strong load factors were helping the airline maintain profitability in the face of rising costs.
He said initiatives for the remainder of the year include the launch of the new Club World seat, new services to New York, São Paulo and Calgary, and further preparation for the move to Heathrow’s Terminal 5 in two years.
The decision to sell cheaper short-haul flights was also paying dividends with improved load factors and more reservations, Walsh said.
- Latest punctuality figures from BA show the airline is failing to hit its targets. Mainline flights punctuality rate was 31%, against a target of 50%. BA Connect was the best at 56%, but services from Heathrow’s Terminal 1 and 4 were 20%. BA languished behind all other major European airlines for short-haul departure punctuality.