BA stays bullish despite losses
Air cargo arm sees double-digit growth in first quarter
BA World Cargo (BAWC) saw double-digit revenue growth during the first quarter of the financial year, but the British Airways group (BA) reported an operating loss of £72 million (US$112.5m).
The increase in revenue was attributed to improved market conditions, while the operating loss was largely caused by the volcanic ash cloud in April and industrial action by cabin crew.
BAWC revenue reached £175 million for the three months ending 30 June, while volumes of 1.1 million freight tonne kilometres (FTKs) for the quarter-year represent an increase of 2.1% on the same period last year.
Overall yield (commercial revenue per FTK) increased by 34% on last year, driven partly by an improved premium product mix and underlying market conditions.
Steve Gunning, MD of BAWC, said: “We have made a good start to the year and we are pleased to see yield levels improving alongside capacity.
“It is encouraging to see the improvement in yields. However, it is imperative that the introduction of capacity in the market remains rational and measured.”
Parent BA said the operating loss was down to the volcanic ash and industrial action, which had cost the group around £250 million.
But it was an improvement on the £94 million loss reported during the same period in 2009.
Group CEO Willie Walsh said: “Despite both revenues and cost being hit by the closure of UK airspace, following the Icelandic volcanic eruption, and the impact of industrial action, our financial performance improved during the quarter from underlying revenue increases and further cost reductions.
“The trends in our passenger and cargo traffic continue to be positive, with yields up and costs down. Together this led to a reduced operating loss for the period.”
BAWC today also announced it had signed a five-year wet-lease agreement with Global Supply Systems (GSS), which will see its three Boeing 747-400 freighters replaced by new B747-8 freighters in early 2011. GSS will dry-lease the freighters from Atlas Air.
Gunning said: “Long-haul freighters form an integral part of our overall business strategy – providing flexibility and capacity on resilient and growing lanes – as we strive for continued excellence in all key areas of the business, including product range, customer service and, of course, network offering.”
BA has been buoyed during the last three months by EC approval of both its merger with Iberia and its transatlantic partnership with Iberia and American Airlines.
The increase in revenue was attributed to improved market conditions, while the operating loss was largely caused by the volcanic ash cloud in April and industrial action by cabin crew.
BAWC revenue reached £175 million for the three months ending 30 June, while volumes of 1.1 million freight tonne kilometres (FTKs) for the quarter-year represent an increase of 2.1% on the same period last year.
Overall yield (commercial revenue per FTK) increased by 34% on last year, driven partly by an improved premium product mix and underlying market conditions.
Steve Gunning, MD of BAWC, said: “We have made a good start to the year and we are pleased to see yield levels improving alongside capacity.
“It is encouraging to see the improvement in yields. However, it is imperative that the introduction of capacity in the market remains rational and measured.”
Parent BA said the operating loss was down to the volcanic ash and industrial action, which had cost the group around £250 million.
But it was an improvement on the £94 million loss reported during the same period in 2009.
Group CEO Willie Walsh said: “Despite both revenues and cost being hit by the closure of UK airspace, following the Icelandic volcanic eruption, and the impact of industrial action, our financial performance improved during the quarter from underlying revenue increases and further cost reductions.
“The trends in our passenger and cargo traffic continue to be positive, with yields up and costs down. Together this led to a reduced operating loss for the period.”
BAWC today also announced it had signed a five-year wet-lease agreement with Global Supply Systems (GSS), which will see its three Boeing 747-400 freighters replaced by new B747-8 freighters in early 2011. GSS will dry-lease the freighters from Atlas Air.
Gunning said: “Long-haul freighters form an integral part of our overall business strategy – providing flexibility and capacity on resilient and growing lanes – as we strive for continued excellence in all key areas of the business, including product range, customer service and, of course, network offering.”
BA has been buoyed during the last three months by EC approval of both its merger with Iberia and its transatlantic partnership with Iberia and American Airlines.
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