High oil prices and the troubled opening of Terminal 5 have been shrugged aside by British Airways, which has announced that operating profits of £875 million and a revenue increase of 3.1 per cent.
“This is an outstanding financial result for the company despite rising fuel prices and significant economic slow down in the last six months,” said Willie Walsh chief executive at BA. “We have achieved our goal of a ten per cent operating margin, which I am delighted has triggered the reward scheme to our staff.” BA staff are to receive a share of a £35m bonus fund. This year’s operating profit of £875m compares well with last year’s £602m.
Walsh cited cost savings across the company for the improved revenues. “Against the backdrop of a progressively tougher trading environment, we have continued to work hard on our cost savings to deliver these strong results,” Walsh said as the company announced its preliminary results for the 12 months to March 31, 2008.
Total operating costs are down by 0.7 per cent to £7.9 billion. Employee numbers rose, but costs fell by 4.9 per cent to £2.2bn. Last year BA CIO Paul Coby successfully implemented an SAP enterprise resource planning system for resource management in its extensive engineering business and an internal employee self-service system for access to online pay. “It is quite an achievement to have everyone using it,” he told CIO.
The last quarter had not been an easy one for BA due to its troubled move into Heathrow’s Terminal 5 (T5), which caused public disgrace both to the airline and Heathrow operator BAA. “Despite the difficulties of the opening of T5 in the first dew days, it is now working well and some two million passengers have gone through it,” IT, security, staff access and baggage handling systems all led to delays and chaos in the opening weeks of T5.
Rising oil prices have had a knock on effect on the airline, which said it uses six million tonnes of jet fuel a year. “Volatility in the price of oil can have a material impact on our operating results,” a BA statement said. BA spent £2bn on fuel last year.
Walsh said online services were still providing BA with significant savings and that it was “continuing to enhance BA.com” as a result. CIO Coby said 60 per cent of check-ins at terminal four are now conducted online.