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BA Sees Pre-Tax Profits Soar

by Glen Shapiro,, New York

05 November 2007

It has emerged that British Airways' pre-tax profits were GBP593 million in the first six months of its financial year.

In an interim management report published last week, BA Chief Executive Willie Walsh announced his delight at the positive period that the company is experiencing, despite recent claims that the dramatic incease in aviation fuel costs would hit them hard.

The report highlighted not only the pre-tax revenue increase, but also an operating profit of GBP556 million, and an operating margin of 12.5%.

Mr Walsh observed that:

"These are record results which are driven by all the hard work our people put in last year to tackle the cost base of our business. Profits are up some 26 per cent and costs are down nearly 4 per cent. Fuel costs remain a major challenge and our fuel bill for the year is expected to top GBP2 billion for the first time. We see every possibility of achieving our 10 per cent operating margin by March 2008. "

He continued: "Our business plans for the future are gaining real momentum. We announced an order for 36 new longhaul aircraft that are greener, quieter and technically more advanced."

BA has justified higer capital expenditure than last year (at GBP297 million), explaining that it had taken delivery of three new Airbus A321 aircrafts, and has continued to invest in the new Club World cabin and Terminal 5.

With regard to taxation, the management report announced that "the tax rate was 18 per cent and benefited from a one-off credit because of the reduction in the UK corporation tax from 30 per cent to 28 per cent, effective from April 1, 2008. Excluding the one-off credit, the tax rate for the period would have been 30 per cent".

Mr. Walsh concluded by stating that:

"Our final and most enduring theme in recent years has been achieving a competitive cost base. Improving cost efficiency and eliminating waste in our business is key to delivering our target of a 10 per cent operating margin, which we are on track to achieve by March 2008."

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