Friday May 16, 09:54 AM
British Airways full-year pretax up; current year outlook challenging UPDATE
(Adds details on operating margins, new tax regime; share price)
LONDON (Thomson Financial) - British Airways Plc. posted a 44.5 percent rise in its full-year pretax profit on higher revenue and said the current year will be challenging,
against an uncertain economic outlook.
For the year to March 31 2008, BA said its pretax profit rose to 883 million pounds from 611 million last year as revenue increased to 8.75 billion pounds from 8.49 billion. Total operating costs were down 0.7 percent to 7.9 billion pounds, with unit costs also down 0.5 percent.
It also said it has achieved an operating margin of 10 percent in the fourth quarter against 7.1 percent in the same period of last year.
The company's cash balance at the end of March was over 1.8 billion pounds, down 491 million on the previous year primarily due to one-off payments into the New Airways Pension Scheme (NAPS) totalling 610 million pounds and to the U.S. Department of Justice for anti-competitive activity. Its net debt was 1.3 billion pounds, up 319 million on March 2007.
The company has proposed a dividend of 5 pence for the year to end-March, 2008 -- its first since 2001.
British Airways (LSE: BAY.L - news) said its first quarter will be particularly difficult as crude prices have risen from $58 per barrel in the first quarter last year to around $115 this year. It has boosted its hedging cover to 72 percent for the first half of the year and 60 percent for the second half, with around 30 percent coverage for 2009 to 2010.
The delayed transition to Terminal 5 affected both costs and revenue, and will feature in the quarter and full year as it deals with the challenges of the move into the terminal, it added.
The new 'per plane' tax regime, effective Nov. 2009, will distort competition and may hit revenues, the company added.
But BA said it expects revenue for the current year to increase by around 4 percent, which is in line with the lower end of the guidance given earlier.
It has reduced capital expenditure and is reviewing its capacity, costs and network in the context of the economic pressures and high fuel prices.
'We have a strong balance sheet and cash flows that will enable us to take advantage of opportunities to strengthen our business,' the company added.
At 9:09 am, its shares were up 3.24 percent at 231.25 pence.
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