British Airways performs well in challenging conditions

British Airways appears to have performed quite well in what have undoubtedly been challenging conditions for the United Kingdom’s flag carrier. Some analysts have noted the irony in the fact that BA just paid out dividends, for the first time in seven year, during an economic slowdown, during stagnation in the travel industry and right after the extra expenses it incurred during the chaotic opening of Heathrow’s new Terminal 5. According to media reports, BA paid $0.10 per share in dividends, after it saw its profits double, bringing it up to $1.3 billion. In 2007, the carrier’s profits stood at just over $565 million.

The value of BA’s shares also increased by around 4.5 percent today, as news of BA’s good financial situation spread. Much of BA’s good fortunes has to do with relatively high demand for premium class (business and first class) travel, which increased by 4.4 percent. This was especially important for BA, as the number of economy class passengers on some long-haul routes actually declined during this same period. As such, this drop was largely off-set by the rise in travelling businesspeople.

Despite this good news, there are clouds on the horizon for BA, and the company’s executives were quite candid about this. British Airways projected that the high price of oil (which has now surpassed $120 per barrel) means that the airline will likely have see the amount it pays out in jet fuel rise to $5.8 billion, from the current rate of 1.9 billion. Should this occur, BA will likely find it more difficult to maintain such high profits in the future.

www.britishairways.com