Volumes improve despite tough market conditions (08/11/2004)

Increases in volumes have led to a strong performance for British Airways World Cargo (BAWC) in the first half of the financial year. In the period to 30 September 2004, the airline saw an increase of 15 per cent in Cargo Tonne Kilometres to 2,419m. Flown revenues have also risen to £235.8m, an improvement of 5.4 per cent in comparison to the same period last year. The increase in revenues shows an even sharper rise of 14.2 per cent when the impact of the exchange rate is removed.

BAWC's focus on developing its freighter network has driven volume gains. The carrier's third longhaul freighter service was launched in September 2003 with the European shorthaul freighter service following a month later. BAWC's ongoing agreement with Korean Air has also led to capacity increases.

Volume increases have led to a 4.4 point improvement in load factor compared to the same period last year. This is the result of the airline working more closely with its customers and introducing improvements to its in-flight planning and capacity management processes.

The strong showing from a revenue and capacity perspective has been significantly affected by yield challenges. Rising fuel prices have been partially countered by the increased fuel surcharge but yield continues to have a negative impact. Global market conditions remain tough, with the UK market as a whole witnessing an 8 per cent year on year decline in yield. Competition in Europe has also been fierce with US carriers performing strongly with their services that originate in the Middle East.

Gareth Kirkwood, Managing Director, British Airways World Cargo, commented:

"Our strong performance in the first half of the year was achieved by aligning capacity to meet our customers' requirements which is reflected in the ongoing development of our freighter business.

"This strategy continues to pay dividends, with the team working hard to maintain and improve our performance. The recent launch of our new service between the UK and China reinforces our long-term commitment to developing our network. The route has started strongly and we are in a good position to capitalise on the opportunities in this region.

"We are well aware that yield remains one of the biggest challenges to our business. However, by delivering world class customer service and investing in our network, I remain confident that we will increase revenues and meet the needs of our customers across the globe."