British Airways Profits Climb 45%

British Airways has just announced profits of £883 million in the year to March 31. Boss fellow Willie Walsh called it an “outstanding” result. Still, he isn’t taking a bonus because of the problems encountered at the opening of Heathrow’s Terminal 5. He has warned that earnings this year will be adversely affected by the troubles, and he feels it’s the best thing to do.

The company consumes 6 million tons of airline fuel a year, and because of the increase in the price of all petroleum distillates, BA is facing a fuel bill that is £124 million higher than last year. The company has engaged in a rather ambitious and aggressive hedging program, and the weak dollar has helped. Still, it’s a big factor that will weigh on results.

Overall, total operating costs declined 0.7% thanks to lower staffing costs. Mr. Walsh said, “We operate in a volatile market and this year has been no different. We have continued to work hard on our costs savings to deliver these strong results.” Shareholders can expect a dividend, their first in 7 years, and staff will get a bonus of £35 million to split.

Mr. Walsh will decline his £700,000 bonus as mentioned. “I thought it would be inappropriate that I be paid a bonus,” he told BBC News. He claimed his decision had not been affected by media perceptions, “I didn't do it for press reasons. I have made it very clear that I was bitterly disappointed about the way we performed at the opening of Terminal 5.”

Maybe, maybe not. However, because the opening of the terminal happened right at the end of the company’s fiscal year, most of the financial pain will be felt in the current year. Thus far, the situation has cost £16 million, but that doesn’t include anything since May began. Sometimes, doing the right thing generates the right PR as well.

© Copyright 2008 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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