British Airways' profit up 11.1% on higher fares Passenger yield surges in quarter

August 06, 1996|By BLOOMBERG BUSINESS NEWS

LONDON -- British Airways PLC reported yesterday that first-quarter pretax profit rose 11.1 percent, in line with expectations, as fares rose amid a worldwide resurgence in air travel.

The United Kingdom's dominant airline posted one of its best quarterly figures ever for passenger yield, which measures the amount paid by each passenger to be flown one mile.

The figure rose 6.6 percent, countering an industry trend for declining yields, as British Airways sold fewer discount seats and more higher-margin premium seats.

The airline's yield had risen 4.1 percent last quarter, and British Airways Chief Executive Robert Ayling said he was confident that the upswing isn't over.

"We're looking at at least three years of good prospects for aviation generally and for the service industry in particular," Ayling said.

"We feel that the economic background is going to be a favorable one," he added.

The earnings come as British Airways faces a legal battle with USAir Group Inc. over the future of its 24.6 percent stake in the U.S. airline. The Arlington, Va.-based carrier last week sued its largest shareholder and joined other major U.S. airlines in opposing British Airline's plans for an alliance with AMR Corp.'s American Airlines.

USAir's lawsuit in a federal court seeks to dissolve the partnership with British Airways, arguing that BA broke the terms of its 1993 agreement with USAir and U.S. antitrust law by seeking to ally with American.

Ayling said "we don't see any need to consider" selling the stake in USAir.

"We feel that there's a commercial agreement between USAir and British Airways which is beneficial to both companies," he said.

As the largest shareholder in USAir, Ayling said, his company will seek to convince the U.S. airline to "do what is best for its interests."

The London-based airline's pretax profit rose to 150 million pounds, or the equivalent of $230 million, in the three months ended June 30, from $209 million in the same period a year ago.

British Airways shares fell 6.5 pence to 534 pence in London trading, a decline that also reflected disappointment with higher- than-expected costs and July traffic figures that showed that it lost customers because of a threatened strike by its pilots.

Pub Date: 8/06/96

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