BA profits up 45%; Walsh declines bonus
16.05.08
British Airways reported a 45% rise in annual profits today and the airline declared its first dividend in seven years. But it warned that economic uncertainty and record fuel costs pose challenges in the current year, and the airline's Chief Executive, Willie Walsh, declined to take a £700,000 bonus in the wake of the disastrous opening of Heathrow Terminal 5.
BA made a profit of £883m on revenues 3.1 % higher at £8.75 billion in the year to 31 March. The group met its operating margin target of 10%, which Mr Walsh said was 'an outstanding financial result for the company despite rising fuel prices and significant economic slowdown in the last six months.' But the airline said the first quarter of the current financial year would be particularly difficult, with crude oil prices now at $115 a barrel - more than double the $58-a-barrel price a year ago.
The airline's bill for the six million tonnes of jet fuel it uses in an average year was £124m higher than the previous year, despite significant hedging and a weaker dollar. However, total operating costs were down 0.7% as a result of lower staff 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.'
Unveiling its results, BA said that shareholders would receive their first dividend since 2001 - 5p per share - and that its 42,000 staff would share a £35m bonus. However, Mr Walsh said he had turned down his annual bonus after taking responsibility for the problems at Terminal 5. He said: ‘I thought it would be inappropriate that I be paid a bonus.'
A spokesman said it was reviewing its capacity, capital expenditure, costs and network against the backdrop of economic pressures and high fuel prices, and said revenue growth this financial year was likely to be at the lower end of its previous forecast range of between 4% and 4.5%.
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