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Discussion Starter · #1 ·
Their total profits were already higher than any other airline in the world last year, by far, and this year they report a 21% gain on that. Well done BA!! Now to deal with that pensions deficit....


BA profits up on ticket increases
http://news.bbc.co.uk/1/hi/business/4996458.stm



British Airways has seen its pension deficit rise


British Airways (BA) has reported an increase in annual profits after the airline filled its planes with passengers on more expensive tickets.

Pre-tax profit was £620m ($1.2bn) in the 12 months ending 31 March, 21% up on the previous year. Sales increased to £8.52bn from £7.7bn, BA said.

Operating profit was £705m, which topped market expectations.

Faced with increased competition, BA has added new routes and raised ticket prices to offset surging fuel costs.

BA shares closed 29.25 pence, or 9.14%, higher at at 349.25p on the London market.

"We believe trading and strategy are going very well for the company," Deutsche Bank said in a note to clients.


Pension proposals

The main driver of BA's business is its trans-Atlantic and long-haul operations, and the firm has added new routes to China and India to tap into growing demand among top business travellers.

About 60% of BA's earnings are made on routes to the US and Canada.

Also helping BA's bottom line has been a recovery in its short-haul business, which the firm said is now in profit for the first time in 10 years.



I am pleased with the dialogue we have had with staff, trustees and trade unions on the vital pensions issue
BA chief executive Willie Walsh


BA has also improved its seat or load factor, with fuller planes as demand for air travel grows.

Earlier this year, BA announced plans to cut fares by more than 50% to 65 destinations in an effort to lure clients away from its lower cost rivals such as Ryanair and Easyjet.

BA also is looking at ways of cutting costs, especially with relation to its pensions deficit.

The airline has said it wants to raise the retirement age for its pilots and cabin crew. It would then inject £500m into the pension scheme.

On Friday, BA said that its pensions deficit was £2.07bn, up £101m from a year ago.

"We have announced our proposal to tackle the pension deficit and I am pleased with the dialogue we have had with staff, trustees and trade unions on this vital issue," said BA's chief executive Willie Walsh.

"These are good results with revenue performance by improvements in seat factors and yield," he added.


Higher costs

The effect of funding the pensions shortfall was evident during the past 12 months, and BA said that employee costs increased by 5%.

Another negative was the impact of record crude oil prices that pushed fuel costs significantly higher and were a main factor behind an 8.2% gain in total costs.

BA said its annual fuel bill rose by 44.7% to £1.6bn, and is forecasting that it will need to spend £600m more this year to keep its planes in the air.

"Market conditions remain broadly unchanged," said Martin Broughton, BA's chairman.

However, BA's efficiency plans would involve significant changes and there are fears they could lead to strikes, though Mr Walsh played down the likelihood of a repeat of the industrial action that blighted travellers last summer.

"There is nothing on our agenda to signal there will be any difficulties this summer," he said. "We are going to tackle all aspects of the cost base where we can."

BA said on Friday it would pay staff a £48m bonus after they achieved an 8.3% operating margin.
 

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Banned
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14,131 Posts
Discussion Starter · #3 ·
^ Naah.... it was ditching unprofitable flights to Europe from regional airports that helped BA deliver these stunning results in the first place. ;)
 

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Iechyd da!
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250 Posts
BA needs to buy a shit load of A380s and get rid of the old wood 744s! Make sense in and outa heathrow - as max ATMs are 480,000 per year = slot constraints.
 

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Discussion Starter · #5 ·
^ Eventually I think they will do that. However not yet. Their 747-400s were mostly bought in the 1990s. Many are only 7-8 years old. The A380 programme doesn't seem to be doing too well at present (no-one has ordered a passenger version for about two years now....) and it's constantly being delayed and experiencing severe cost overruns. Airbus have been completely outmanouvered by Boeing in the widebody market. My guess is that BA will order 777-300ERs in the short term, skip the A380-800 altogether, and wait for the larger versions of the A380 that will follow.
 

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Scaramouche, Scaramouche,
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2,879 Posts
just because Virgin tipped of the OFT does not mean that they should be allowed to get away with this investigation

there was an excellent article by the Suns buisness editor last week about the investiogation about how bascally everyone is trying to screw BA over
 

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14,131 Posts
Discussion Starter · #7 ·
And again with the Q1 results: :)


BA profits soar despite fuel cost
http://news.bbc.co.uk/1/hi/business/5244404.stm



BA is being investigated by regulators over alleged price fixing


Rising passenger numbers have helped British Airways shrug off the rising cost of aviation fuel and post a 57% increase in first quarter profits.

Pre-tax profit for the three months to the end of June hit £195m, compared with £124m in the same period of 2005.

Profits rose despite a 44% rise in fuel costs and a 7% hike in staff costs as a result of BA's pension scheme deficit.

BA said new low fares had boosted short-haul traffic and it had still been able to raise its profit margin.


'Brutal' competition

This rose to 9.1%, compared with the 8.5% margin earned in the first quarter of 2005.

"On short-haul, our new low fares have been a big success," said chief executive Willie Walsh.

"While competition in this market is brutal, I am delighted to see we are winning customers with record seat factors."

But Mr Walsh warned that market conditions were set to get tougher in the second half of the year as airlines became more competitive on prices.

Meanwhile, fuel costs were expected to be £550-600m higher than they were in 2005.


Price-fixing inquiry

However, Mr Walsh said that there were no immediate plans to raise fuel surcharges for customers.

BA is being investigated by UK and US regulators for alleged price fixing involving fuel surcharges on long-haul flights to and from the UK.

The airline's commercial director and head of communications have been given leave of absence during the inquiry.

Mr Walsh said that BA's £2.1bn pension deficit would be discussed over the coming months.

BA has been hit by a series of summer strikes in recent years, but Mr Walsh sounded upbeat about the prospect of avoiding a repeat this year, saying that the airline had made "steady progress on changes to working practices".
 

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LONDON - Westminster
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2,841 Posts
Let's face it BA is a flying pension fund. As long as the pension fund situation isn't resolved, BA will be very limited in what it can do. I think they have to change the existing "defined benefit" into a "defined contribution" fund and have the employees take about a 1 bio hit, BA the other 1 bio. But most important is to change the "defined benefit" into "defined contribution", otherwise they will have this problem for the next 20 years. If BA has to continue the defined benefit, it will loose about £300 mio per year, because current yields are that low. The pilots should be happy, the defined benefit plan is giving them a return of close to 10% a year; where the hell could you get something like that these days? If the unions will not agree, the best alternative approach is that BA decides to go bust. A "BA new" could be created taking over all the slots (probably giving up some to Virgin) and it would also allow "BA new" to hire more motivated people. It a story similar to Eurotunnel. It is best both companies go bust and start from a clean slate. Of course, a BA bankruptcy would create a huge social problem (a lot of employees losing a large part of their pension), but hey, if the unions aren't reasonable, what could you expect?
 
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