News

British Airways posted a surprise third-quarter operating profit, reflecting the impact of deep cost cuts and capacity reductions, and said it had adapted to industry changes caused by the global recession.

The airline on Friday reported an operating profit of GBP£25 million pounds (USD$39 million) in the three months to the end of December.

"These results highlight the impact of permanent changes across the company on our costs," BA chief executive Willie Walsh said.

"Those changes, combined with capacity reductions and external spending cuts, mean operating costs are down by 10.5 percent and show that we've adapted quickly to the new business realities created by the global recession."

Rival Air France recently said business was stabilising but Lufthansa's chief financial officer said last month that some analyst estimates for 2010 were too high.

However, Finnish national carrier Finnair on Friday reported wider fourth-quarter losses and said it expected to make a loss in the first quarter this year.

British Airways' non-fuel costs were down and largely came from savings in employee, engineering and selling costs.

BA's operating loss came in at GBP£86 million for the first nine months of the year, sharply down from a profit of GBP£89 million it made in the same period a year ago, while revenues fell 12.9 percent to GBP£6.14 billion.

TOUGH 2010

The International Air Transport Association (IATA) last week said the aviation sector would face a tough 2010 making up for the lost demand in 2009 and handling new security demands.

BA said its yields fell 8.8 percent in the third quarter, reflecting lower surcharges and cabin class sales. Yields were 11.9 percent up in the same quarter last year.

"Long-haul premium yields have recovered to 2007 levels and show recovery. Yields in non-premium cabins have some way to go before they recover and short-haul yields have not recovered to the extent we have seen elsewhere," said Walsh.

The airline said it carried 7 percent fewer passengers in January year-on-year. The number of its premium, or business class, passengers fell 2.1 percent year-on-year, while non-premium traffic fell 7.9 percent on the same month last year.

BA, which said its merger agreement with Spain's Iberia would be finalised by the end of the year, added that it was confident of receiving regulatory approval for its proposed transatlantic tie-up American Airlines and Iberia.

Low-cost rivals easyJet and Ryanair recently raised their profit forecasts and said they were still taking market share from flag carriers such as BA and Air France-KLM.