British Airways World Cargo announces third quarter results. (04/02/2002)

British Airways World Cargo has reported revenues of £142.6 million for the three-month period of 1 October to 31 December 2001, down 16.7% compared with the same period in 2000, operating with a significantly reduced capacity. For the nine months to 31 December, revenues were £414.4 million, 14.8% down on the same period in 2000.

The results follow a challenging quarter, which included the ongoing deterioration of global economic conditions and the effects of September 11th, as well as the introduction of stringent new security procedures and major changes to the European, American and freighter cargo schedules.

Tonnes flown during Quarter 3 were 180,000, down 24.9% versus Q3 last year of 239,000, primarily as a result of restrictions and schedule reductions from September 11th. Over the nine-month period, tonnes flown were down 20.9% to 559,000, versus last year of 706,000, following the global economic slowdown.

Cargo capacity in Quarter 3 was 15% less than during the same quarter last year. This equates to a 10% reduction this year, when compared to the same nine-month period last year, and results from the airline's strategy to reduce passenger capacity in line with profitable demand. Capacity reduction has been predominantly due to the continued move from wide to narrow bodied aircraft in Europe, but also affected some other key markets including East Coast USA and the Middle East.

In Europe, trucking schedules have been developed to help alleviate the effect of fleet changes across the region. The region remains affected by the enhanced security requirement to make all cargo from the region 'known in the UK'.

The freighter schedule introduced at the end of October took advantage of the flexibility of British Airways wet lease and block space agreements, allowing the cancellation of services where volumes had dropped. In addition, one freighter has been re-routed from Hong Kong to Johannesburg to capitalise on increased demand in the region.

Gareth Kirkwood, Managing Director, British Airways World Cargo, said: "It has, as expected, been a difficult quarter across the industry and although the results show a deterioration on last year, they remain broadly in line with our expectations. Our aim was to maintain optimum revenue in the face of major capacity reductions and we delivered against this during the quarter.

"Following September, we worked closely with the DTLR to introduce even more stringent security measures across our global network, the complexity of which had resource implications and initially forced us to impose severe restrictions. The successful introduction of these measures globally means that we continue to operate to the highest possible standards of security across our network and we will continue to do so at all times.

"The benefit of having wet lease and block space freighter capacity was clearly seen in the second half of the year, as we have been able to withdraw or reallocate capacity at short notice.

"We have been pleased to see general freight volumes increase beyond initial expectations during the latter half of the quarter, although trading conditions remain extremely competitive," Kirkwood continued.

Looking ahead, Kirkwood said: "We have been encouraged by positive market indicators in the Pacific, Europe and Southern regions and anticipate that volumes will continue to grow in these areas. Whilst the Americas and UK are still under pressure, we expect the market to pick up slowly in the next few months.

"During the quarter we have continued to focus on improving our profitability and reducing costs. We have reviewed our cargo network to ensure that we are operating at maximum efficiency with reduced complexity across our business. We are continuing internal testing for our new products, which will clarify and simplify our offering and plan to launch them in the near future," he concluded.