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Summary of the headline figures
Capacity in March, measured in Available Seat Kilometres, was 11.2 per cent below March 2001. Traffic, measured in Revenue Passenger Kilometres, fell 3.2 per cent. The reduction in traffic comprised a 9.2 per cent decline in premium traffic and a 2.1 per cent fall in non-premium traffic. Passenger load factor of 75.7 per cent was up 6.2 points on March 2001. Cargo, measured in Cargo Tonne Kilometres, fell by 2.5 per cent.
For the quarter ended 31 March 2002, ASKs fell by 11.1 per cent, while RPKs fell by 4.3 per cent. This resulted in a fourth-quarter load factor of 72.0 per cent, 5.1 points higher than the same period last year. Premium traffic in the quarter fell by 9.1 per cent with non-premium traffic falling by 3.3 per cent. Cargo, measured in Cargo Tonne Kilometres, fell by 5.4 per cent in the quarter.
Market conditions
Traffic is being maintained at the improved levels seen in recent months. Seat factor continues at record levels on the back of capacity reductions. In spite of discounting, total revenue continues to improve. Cargo also continues to improve and has shown its best volume performance since Sept 11th.
Costs
The cost cutting initiatives launched after September 11th and as part of Future Size and Shape continue to deliver financial benefits. As at February 28th, manpower equivalents have reduced by 6,700, since August 2001. These reductions have largely been achieved without severance costs and, as a result, Q4 employee costs will be considerably lower than in the previous year. The severance for “Future Size and Shape” provided for in the year to March 31, 2002 is expected to be in the region of £80 million; the balance is expected in the next financial year. Fuel costs are still expected to be some 6% lower than last year; recent fuel price increases will not affect the costs to March 31, 2002.
Strategic developments
British Airways has made it easier for customers to get the best possible deal when booking flights online with the introduction of a new selling engine. With just one click customers can check availability together with the lowest prices by day, week or month. The new booking system has a colour-coded calendar which shows the best price for a range of dates, allowing customers to compare prices and make trade-offs between price and schedule.
British Airways received confirmation that the Government had approved the payment of compensation for the closure of US airspace for the four days after September 11th. The payment was in line with British Airways’ claim of approximately £22 million.
EU transport ministers gave approval to a 60 day extension of government backed war and terrorism insurance for European airlines. Earlier in March the US Government granted a 60 day extension to its airlines.
Europe’s newest regional airline took off on March 31st with the official launch of British Airways CitiExpress, a wholly owned subsidiary of British Airways Plc. BA CitiExpress is now a legal entity, operating under its own Air Operators Certificate to 48 destinations from 26 UK airports. BA CitiExpress has been created from the integration of two wholly owned subsidiaries, Brymon Airways and British Regional Airlines. Later this year two more subsidiaries, British Airways Regional and Manx Airlines will also join up with BA CitiExpress.
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