BA Swings to Profit in Third Quarter

LONDON – British Airways booked its first operating profit in fifteen months in the final quarter of 2009 but warned it is still heading for a record loss for the full financial year.

Europe’s third largest airline swung to a profit of $39.8 million in its 2009/10 third quarter from an $81 million year-earlier loss on cost and capacity cuts, firming premium passenger traffic and a “marked” improvement in cargo volumes and yields.

This left an operating loss of $136.7 million in the first nine months compared with a $141.5 million profit in the corresponding period a year ago.

The carrier narrowed its third quarter pre-tax loss to $79.5 million from $194 million a year ago, taking total losses for the first nine months of its 2009/10 financial year to $544 million.

Revenue was down 12.9 percent at $9.76 billion against $11.2 billion in the year-earlier period. BA didn’t break out figures for its cargo and passenger units.

“While we are on the right track, we still expect to make record losses this year,” said BA chief executive Willie Walsh. “Permanent structural change is being introduced in all areas and will return us to sustained profitability.”

BA said cargo volume, measured in cargo tonne kilometers, had fallen 4.4 percent in the first nine months of the year, more than two points better than the industry average.

Cargo revenue declined by 25.1 percent in the first three quarters with yield declines of 21.7 percent driven by significantly lower fuel surcharges in line with lower fuel prices and significant falls in freight rates.

Walsh said BA is on track to finalize a merger agreement with Spain’s Iberia by the end of the year.

Separately BA announced cargo traffic in January increased by 6.5 percent from a year ago but passenger numbers were down 8 percent, partly due to heavy snowfalls which closed UK and European airports.