British Airways back in the black

British Airways on Friday posted net profits of £107 millions for the first six months of the group's financial year, its first interim profit for two years, as revenues rose and non-fuel costs fell.

The impressive result, equivalent to €122 millions or $170 million, compared with a net loss of £217 million in the six months to September 2009, the airline said in a results statement.

BA, which is merging with Iberia of Spain, said pre-tax earnings hit £158 million, compared with a year-earlier loss of £292 million. That result smashed market forecasts for earnings of £73 million.

The results were achieved on the back of steep cost-cutting and despite recent travel chaos was caused by the Icelandic volcanic ash cloud in April and cabin crew strikes.

"The changes we have made to our cost base are now having a big impact on the business," chief executive Willie Walsh said.

"I'm pleased with the results today -- they demonstrate that the action we have taken has been the right decision for the business. The figures speak for themselves."

Revenues meanwhile rose 8.4 per cent to £4.45 billion in the reporting period, while operating costs declined 1.5 per cent.

"Our concerted efforts to introduce permanent structural change across the airline has led to a reduction in non-fuel costs and a return to profitability," Walsh said in the statement.

"Revenue has increased, driven primarily by yield improvements and, while fuel costs have risen, they are in line with our expectations."

Despite healthy first-half profits, BA saw its share price slide in early morning trade on Friday as the group warned that the economic outlook was uncertain -- and cited a tax hike in Britain next week.

BA shares slid 0.78 per cent to 278.50 pence on the London stock market, which was 0.06 per cent higher in morning trade.

On Monday, the government will ramp up Air Passenger Duty (APD), which is levied on all flights from British airports. The tax will rise by 55 per cent for the most far-flung destinations.
 

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