BA profits soar, despite T5 and fuel pressures

Despite the troubled opening of Terminal 5, British Airways has announced 'outstanding' profits of £875 million and a revenue increase of 3.1 percent.

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Despite the troubled opening of Terminal 5, British Airways has announced 'outstanding' profits of £875 million and a revenue increase of 3.1 percent.

“This is an outstanding financial result for the company despite rising fuel prices and significant economic slowdown in the last six months,” said Willie Walsh chief executive at BA.

“We have achieved our goal of a 10 percent operating margin, which I am delighted has triggered the reward scheme to our staff.” BA's 42,000 staff would receive a share of a £35m bonus fund.

But Walsh said he would not take his bonus because of the airline's failure to move smoothly into Terminal 5 in March.

The troubled move into Heathrow’s Terminal 5 (T5) caused public disgrace both to the airline and Heathrow operator BAA. IT, security, staff access and baggage handling systems all led to delays and chaos in the opening weeks of T5.

“Despite the difficulties of the opening of T5 in the first few days, it is now working well and some two million passengers have gone through it,” he told reporters.

Walsh cited cost savings across the company for the improved revenues.

“Against the backdrop of a progressively tougher trading environment, we have continued to work hard on our cost savings to deliver these strong results,” Walsh said. Total operating costs are down by 0.7 percent to £7.9 billion.

Technology has played a key role in helping the carrier to remove costs.

Last year, BA implemented an SAP enterprise resource planning system for resource management in its extensive engineering business and an internal employee self-service system for access to online pay.

Its online services, such as BA.com, have also provided BA with significant savings. BA's CIO Paul Coby has previously said 60 percent of check-ins at terminal four are now conducted through the internet.

In March, the carrier signed a deal for an airfare analysis software tool that could lead to more than £4.5m in the first year after replacing legacy systems.

But BA must brace for a turbulent year ahead as fuel prices soar. Rising oil prices have had a knock on effect on the airline, which said it uses six million tonnes of jet fuel a year.

“Volatility in the price of oil can have a material impact on our operating results,” a BA statement said. The carrier spent £2bn on fuel last year

BA said it was reviewing its capacity, costs and network to offset economic pressures and rising fuel prices.

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