Newspaper article The Evening Standard (London, England)

Fuel Surcharges Send Profits Soaring at BA; CITY BRIEFING

Newspaper article The Evening Standard (London, England)

Fuel Surcharges Send Profits Soaring at BA; CITY BRIEFING

Article excerpt


FUEL surcharges on passenger air fares have sent profits at British Airways soaring.

With a 26% takeoff in operating profits to [pounds sterling]705 million over the past year, BA figures reveal that the flag carrier has shrugged off the debilitating booming oil price by boosting its revenues with levies on air travellers.

From last month, BA passengers travelling return on long-haul flights have had to pay an extra [pounds sterling]70 on their tickets as a result of the carrier's socalled fuel surcharge.

For much of the last year that levy stood at [pounds sterling]60 return with a [pounds sterling]16 charge on short haul, the income from which enabled BA to bank annual revenues of [pounds sterling]8.5 billion, an increase of nearly 10% year on year.

Chairman Martin Broughton said last month's increase in the surcharge means BA expects to beat City forecasts on revenues in the current year.

"In the year to March 2007, we expect revenue growth of between 5% and 6%, up from the previously forecast 4% to 5% due to the fuel surcharge," he said.

BA says it makes the surcharge because of the record oil price which remains above the historically high $70 a barrel level.

Chief executive Willie Walsh admitted previous forecasts underestimated the spiralling price of kerosene, and in the current financial year BA's fuel costs are now expected to rise [pounds sterling]600 million to [pounds sterling]2.2 billion.

Walsh's cost-cutting saw BA post operating margins of 8.3% for the year to the end of March, triggering a [pounds sterling]48 million bonus for 38,500 BA workers who will on average get an extra week-and-a-bit's wages, with a minimum payment of [pounds sterling]575. BA declined to say how much [pounds sterling]600,000a-year Walsh will get as his bonus.

BA's results hit a number of milestones, not least the first profit from its short-haul operations in a decade.

Having racked up losses of well over [pounds sterling]1 billion in recent years, the shorthaul-business, which in the UK is being rebranded BA Connect, made profits of [pounds sterling]7 million. …

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