British Airways boosted by rise in profits

LONDON, England (AP) -- British Airways will pay a dividend for the first time in seven years after reporting a sharp rise in profit in the year ending March 31, the company said Friday.

Airline chief executive Willie Walsh said he would forgo his bonus because of the shambles in the opening days of moving to BA's new terminal at Heathrow Airport. And the airline warned of turbulence in the current quarter because of the costs related to the terminal and the soaring price of fuel.

British Airways reported a net profit of £680 million ($1.3 billion; €855 million) for the year, compared to £290 million in the previous 12 months.

Profit from continuing operations was up 59 percent to £696 million ($1.35 billion; €875 million).

Revenue rose 3.1 percent to £8.75 billion ($17 billion; €11 billion).

The company said it would return £58 million ($113 million; €79 million) to shareholders, paying five pence (9.7 U.S. cents; 6.3 euro cents) per share.

In the fourth quarter, British Airways said revenue rose 10.3 percent to £2.1 billion ($4.1 billion; €2.6 billion), and it achieved a pretax profit of £95 million ($185 million; €119 million) despite fuel costs rising nearly 20 percent. The company did not break out details of its fourth-quarter performance.
Watch interview with British Airway's CEO Willie Walsh

Walsh would have been entitled to a bonus of up to £700,000 ($1.36 million; €880,000) based on various performance targets, but he was under pressure to refuse it following the chaotic opening of Heathrow's Terminal 5 on March 27. Problems with the baggage handling system led to hundreds of flight cancellations and thousands of bags going astray.

British Airways now plans to begin moving long-haul flights to the new terminal in June.

"I felt it would be inappropriate in the context of the very disappointing opening of Terminal 5 in March," Walsh said in a British Broadcasting Corp. radio interview.

"So despite the fact it was a record year in terms of our financial performance, I advised the chairman that I thought it would be inappropriate."

British Airways operations director, Gareth Kirkwood, and customer services director David Noyes resigned following the fiasco, and this week Mark Bullock, managing director of Heathrow's owner BAA, announced that he was stepping down.

British Airways predicted that revenues in the current year would rise by about 4 percent, which is at the lower end of its previously announced guidance.

"The first quarter will be particularly difficult," the airline said.

"Crude prices have risen from $58 per barrel in the first quarter last year to some $115 this year. The delayed transition to Terminal 5 affects both costs and revenue, and will feature in the quarter and full year as we deal with the challenges of the move into the terminal."

Walsh said talks continued with U.S. carriers American Airlines and Continental Airlines on possible "opportunities for cooperation."

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