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British Airways Profits Fall

August 9, 1999

LONDON (AP) _ Widespread fare discounts and weaker demand for premium-class seats squeezed quarterly profit margins for British Airways PLC, which reported Monday a 46 percent drop in its year-on-year operating profit.

However, pressure on profits was more than offset by 177 million pounds ($285 million) that BA earned from the sale of assets, particularly its stake in Galileo International Inc., a global ticketing company.

BA’s pretax profits rose 38 percent to 200 million pounds, or $322 million, for the three months ended June 30, up from 145 million pounds, or $233 million at the current exchange rate, during the same period last year.

Turnover in the first quarter slipped 2.9 percent to 2.22 billion pounds ($3.57 billion) from 2.29 billion pounds ($3.67 billion), while quarterly operating profit dropped to 94 million pounds ($151 million) from 173 million pounds ($279 million).

BA confirmed plans to reduce its capacity by up to 12 percent over the next three years to help cope with an excess of seats on many air routes.

``Through our fleet and network changes, British Airways will emerge from current market conditions with lower costs and a young aircraft fleet focused on the most profitable sections of the market,″ chief executive Bob Ayling said in a statement.

BA plans to increase the number of flights on profitable routes to try to attract more business customers, while curtailing service on routes that are less in demand, such as London to Jakarta or Pittsburgh.

Shares of BA rose 6 1/4 cents to $63.81 1/4 in trading on the New York Stock Exchange.

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