British Airways returns to profit

BA merger

BA’s long-awaited merger deal with Iberia to create International Airlines Group is also on the horizon, with shareholder documents this week showing the tie-up should complete in January if it receives shareholder approval.

I’m pleased with the results today. Chief executive Willie Walsh

The two airlines would retain their own brands, but the initiative will save them 400m euros (£348.2m) a year by its fifth year. It also recently sealed its three-way trans-Atlantic business link-up with American Airlines and Iberia.

“These are very significant tax burdens that need to be addressed by the Government if we are to contribute to the economic recovery that everybody wants to see.”

British Airways‘s pre-tax profit is the airline’s first half-year surplus for two years.

The airline’s profits haul for the six months ending September 30 was achieved despite disruption to flights caused by the ash cloud from an Icelandic volcano and strikes by cabin crew.

Chief executive Willie Walsh today said the airline had turned the corner.

“The changes we have made to our cost base are now having a big impact on the business,” he said. “I’m pleased with the results today – they demonstrate that the action we have taken has been the right decision for the business. The figures speak for themselves.”

The figure is more than double the £73m that had been expected by analysts. The last time the company reported a half-year profit was in the six months ending September 2008.

Earlier this year BA reported a pre-tax loss of £164m for April to June, attributable in part to the ash cloud scheduling problems and the staff strikes.

We can’t afford to take on the tax burden. BA Chief Exec Willie Walsh

Air tax warning

BA announced its results amid a row over an increase in air tax.

Next week’s rise in the Air Passenger Duty (APD) airport departure tax will make family holidays “unaffordable for many”, Sir Richard Branson’s airline Virgin Atlantic warned today.

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APD rates increase on Monday, with those taking trips to the Caribbean being particularly badly hit.

Those flying economy class to the Caribbean from next week will each pay £75 in APD – a 50 per cent hike on the previous rate.

BA’s Willie Walsh said airlines cannot afford to take on the tax burden and warned that budget airlines would be hit hardest.

“We’re talking about paying almost £450m on an annual basis to the Exchequer through this tax,” he said.

“That’s £450m that British Airways does not have. I don’t believe easyJet has the money to pay this tax and take it on.

Passenger rise

BA’s recent passenger figures have been cheered in the market as it has benefited from a recovery in business travel.

BA flew 4.3 per cent more passengers in September, following robust figures in August as it shrugged off its cabin crew dispute.

Airport operator BAA said this month that a bounce back in business traffic helped Heathrow enjoy its busiest ever two months in July and August.

While this year has seen improvements for BA, there are still staff issues hanging over the group, with the carrier yet to resolve its year-long dispute with cabin crew. Mr Walsh has assured the airline is ready to fly a near-full service in the event of another strike.

BA merger

BA’s long-awaited merger deal with Iberia to create International Airlines Group is also on the horizon, with shareholder documents this week showing the tie-up should complete in January if it receives shareholder approval.

I’m pleased with the results today. Chief executive Willie Walsh

The two airlines would retain their own brands, but the initiative will save them 400m euros (£348.2m) a year by its fifth year. It also recently sealed its three-way trans-Atlantic business link-up with American Airlines and Iberia.

“These are very significant tax burdens that need to be addressed by the Government if we are to contribute to the economic recovery that everybody wants to see.”