By Adelaide Changole
British Airways is riding the winds of fortune, which has been blowing their way this year. The company, which has reported record losses the last two years, has announced its best half-year results since 2007/08, and the best second quarter operating profit ever.
"We finally feel like we are getting out of the doldrums," the airline's Country Manager, George Mawadri said on Thursday during a press briefing.
The company's pre-tax profits for the half year ended September 30 rose to £158 million (Sh19 billion), rising from a £292m (Sh37b) loss last year. The firm's controversial structural changes are paying off, reducing non-fuel costs by 1.5 per cent, and increasing revenue by £345 million (Sh43.8b).
The airline is optimistic the rest of the year will yield even better returns, but remains wary of the global economic climate, which analysts say will experience only moderate growth next year.
BA is, however, taking advantage of the budding recovery by upgrading and expanding its capacity and fleets.
"One thing we have learnt in the past few years is to be more flexible regarding capacity. Ramping it up to meet demand or adjusting it to adapt to seasonality and slumps," Mawadri noted.
BA has already brought back two Boeing 747 planes that had been parked during the height of the recession. It is also adding three Boeing 777-300s to its fleet, and will add another three in the next two years.
The company is also rolling out its new first class cabins, at cost of £100 million. It has already fitted 12 planes with the new cabins.
The airline is also cashing in on emerging markets, as it continues to gain a major foothold in China and Africa. According to the International Air Traffic Association
(IATA), air traffic growth in Africa has outpaced the world. Last year, passenger demand in Africa grew 6.8 per cent, compared to the global average of 3.5 per cent. BA is operating daily flights to Kenya at full, or near full capacity, and is anticipating even greater loads in the future.
More flights
"Since this year begun, we have generally had seat factors of between 95-100 per cent on the Nairobi-London route," Mawadri said.
He said the airline could be reintroducing the bigger Boeing 747 aircraft on the route, or having more flights on the current Boeing 777-300s, should current load factors remain as they are, and the recovery gains traction.
But the new environmental tax regime is looming over BA's party, and threatening to rain over its parade. UK raised duty the duty paid by all passengers flying to — or from — a United Kingdom airport, for the second time this year.
"This means that air passenger duty (APD) has been quadrupled in four years to £85 in the economy class, and £170 in premium class on African routes," said Mawadri, adding that the move had raised fares for the airline, which has UK as its hub.
Analysts say UK businesses could suffer as long-haul carriers opt to ditch Britain's airports in favour of the likes of Amsterdam and Frankfurt, where APD is not applicable.
"APD was doubled two years ago, making air travel from the UK the most heavily taxed in the world. The Government's own figures show that British airlines already meet their environmental costs, so there can be no 'green' justification for these additional taxes," said BA's CEO, Willie Walsh.
UK's Airport Operators Association (AOA) cited the results of new study, which estimates that the airline industry will exceed its environmental costs — the amount the Government calculates the aviation industry should pay to offset the damage it causes — by up to £1.1 billion (Sh139.9b) in 2012.
Source: The Standard | Online Edition
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