British Airways World Cargo 2001/2002 Financial Results (20/05/2002)

British Airways World Cargo has reported revenues of £553.6 million for the financial year ended 31st March 2002. This is a fall of 12.3% from £631.3 million in 2001, during a year in which the net effect of schedule changes was a capacity reduction of over 12%.

Over the year, the reduced capacity across the entire network came predominantly through the shift from wide-bodied to narrow-bodied aircraft in Europe, together with the withdrawal of block-space freighter capacity.

Reflecting the global economic decline, the volume of cargo carried across the airline's international network fell by 18% to 740,200 network travelled tonnes from 907,435 network travelled tonnes in 2000/2001. This figure comprises the effect of the 12% reduction in capacity on some key routes, and 6% due to market weakness and the effect of September 11th.

British Airways World Cargo also saw a slight reduction in yield, as a result of excess capacity across key markets and the reduction in demand. The effects of this were minimised by the introduction, early in the year, of a dynamic revenue management model, which allows enhanced capacity management across the network, with an integrated pricing approach. However, this pressure on yield is anticipated to continue in the coming financial year.

Gareth Kirkwood, Managing Director, British Airways World Cargo said: "The results we are announcing, although down on last year, reflect a number of decisive and immediate actions taken early in what was, without doubt, the most challenging year that the industry has seen. As such we ended financial year 2001/2 in a much stronger competitive position than we began it.

"In our first full year of operation from Ascentis, we have delivered improved operational performance across our network and continue to deliver our aim of providing a consistently reliable world-class service to our customers," continued Kirkwood.

In Quarter 3, initiatives were undertaken to increase productivity across all areas of the business, including a full review of the regional network, a review of cargo schedules and a network-wide cost-reduction programme.

Changes to the freighter programme also contributed to significant savings, as the airline capitalised on the flexibility offered by the wet-lease agreement on its two dedicated freighters. A review of the freighter flying schedule saw the cancellation of the Singapore block space freighter service and the reallocation of some Hong Kong and Kansai capacity to offer a stronger network proposition for customers, including the addition of services to Atlanta, Vittoria and Johannesburg. This has contributed to a strong freighter performance at the end of the year.

Since the beginning of Quarter 4 there has been an encouraging improvement in business, driven by an upturn in the market and by improved operational performance. According to latest Association of European Airlines (AEA) market share data, British Airways World Cargo has improved market share over the quarter from 13.4% to 14.6 % and volumes drew almost level with the same period in 2001. This upturn has continued even more strongly in the new financial year.

Other measures introduced by British Airways to reduce its operating costs included cutting discretionary expenditure and staffing levels across all areas of the business, to counteract the market downturn.

Within British Airways World Cargo, manpower levels were reduced by 10.8% between August 2001 and year-end, in line with the Future Size and Shape project. This was largely achieved through reducing overtime and cutting back on contractors.

Looking ahead, Kirkwood said: "Moving forward, we are predicting a modest rise in traffic levels - of 1.4% - in financial year 2002. This largely represents a bounce back to levels seen before September 2001 with the overall downturn carrying on for a little longer still.

"As a business our priority remains the provision of excellent customer service. We listen carefully to what our customers say, and over the past few years we have consistently heard that they want a high level of reliability, customer communication and effective recovery in the event that a failure does occur. We have made a step change in recent months in the quality of our loose freight handling and now offer world-class service on intact, loose, express and courier freight handling as well as our niche products such as valuables and perishables. Our ongoing focus will be working with our customers to introduce a number of new products to the portfolio, which are designed to be clear, simple and easy to use," he concluded.

British Airways World Cargo Results at 31 March 2002

	2001/2002	2000/2001
Revenue	£ 553.6 million	£631.3 million
Total Network Travelled Tonnage	740,200 tonnes	907,000 tonnes
	(Freight, courier, mail)