BA flies to £230m profits

SHARES in British Airways slid to a new 2004 low today after fears over the escalating price of fuel dampened news of better-than-expected profits.

The national flag carrier reported a 70% rise in pre-tax profits to £230m for the year to 31 March even after it digested an extra £80m of fuel costs in the 12 months.

It expects fuel costs to rise by a further £150m this year to break through £1bn. This year's revenues are forecast to grow by between only 2% and 3%, reflecting continued tough trading.

Finance director John Rishton said the carrier expects to claw back only about half those extra costs through last week's controversial decision to slap a £5-a-time fuel surcharge on passenger tickets. He said about 45% of BA's future fuel consumption is hedged at an average price of around $28.50.

But the fuel warning and the failure to signal a resumption in the payment of shareholder dividends - axed two-and-a-half years ago after the 9/11 atrocities - sent BA's stock down 7 3/4p to 239 1/2p, its lowest since the start of the year and a fall of nearly 30% over the past two months.

BA's debts were cut by almost £1bn to £4.1bn in the year. Net debt is now about two-thirds its levels at the height of the post-9/11 crisis and at its lowest in seven years. Rishton has a self-imposed target of £3bn.

Cost savings after the 13,000 job cuts ordered by chief executive Rod Eddington have risen to £869m, almost £220m more than Eddington promised two years ago.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in