BA increases cost-cutting

By THIS IS MONEY
Updated:

 

BRITISH Airways has slashed costs by £800m a year -£150m more than expected - enabling the carrier to boost its profits.

Chief executive Rod Eddington will announce tomorrow that the savings mean profits for the year ending March 31 will be about £185m, compared with £135m a year earlier.

The airline has made its savings by cutting jobs - 13,000 have gone in the past three years - and cutting travel agents' fees because of a move to online bookings.

The success on costcutting will go some way to alleviate concerns in the City about the effect on BA of soaring aviation fuel costs. Last week's imposition of a £5 surcharge on return tickets should net the company £75m.

But with the price of crude oil expected to top $50 a barrel, there are worries that the failure adequately to hedge against higher fuel costs will hit future earnings.

An increase in premium passengers will make it easier for BA to wage its farecutting war on shorthaul routes. But analysts fear the impact of events in the Middle East.

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