Friday, December 15, 2017

Airlines


BA second quarter profits reach $386m
December 2002 4

British Airways beat market expectations with tripled second-quarter operating profits, but its shares fell nearly seven per cent as investors worried about revenue pressures and an uncertain outlook.

Analysts said a small rise in the average passenger fare yield and a decline in the average cargo yields disappointed some investors, while its debt levels were still a concern despite progress in reducing the mountain of debt.

"It's a result that is ahead of expectations, but it is not a fantastic result," Morgan Stanley analyst Martin Borghetto told Reuters.

BA posted operating profits of £248 million ($386 million), up from £72 million last year when it was hit by the closure of US air space in the week after September 11.

"They have done very well on the cost side. Clearly fuel has helped," said Commerzbank analyst Chris Tarry, referring to the 32 per cent fall in the cost of fuel in the quarter. Labour costs fell by 15.1 per cent.

Under a programme called 'future size and shape', the carrier has been cutting 13,000 jobs, simplifying its fleet, reducing capacity, and adopting online ticketing tactics used by budget airlines in an attempt to tackle its high cost base.

But revenues for the three months to September 30 fell by 6.5 per cent to £2.1 billion due to the weak global economy and foreign exchange rates. Reducing the number of seats helped the average fare yield per passenger rise by 1.2 per cent.




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