FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
FURNISHED PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
02 February, 2007
BRITISH AIRWAYS Plc
(Registrant's Name)
Waterside HBA3,
PO Box 365
Harmondsworth UB7 0GB
United Kingdom
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F X Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule101(b)(1)
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a
Form 6-K if submitted solely to provide an attached annual report to security
holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7)
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a
Form 6-K if submitted to furnish a report or other document that the registrant
foreign private issuer must furnish and make public under the laws of the
jurisdiction in which the registrant is incorporated, domiciled or legally
organised (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press release, is not required to be and has
not been distributed to the registrant's security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.
Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
CONTENTS
1. 3rd Quarter Results
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorised.
BRITISH AIRWAYS Plc
By: /s/_________________________
Name: Alan Buchanan
Title:Company Secretary
Date 02 February 2007
INDEX TO EXHIBITS
Exhibit No. Description
1. 3rd Quarter Results
THIRD QUARTER RESULTS 2006-2007 (unaudited)
OPERATING AND FINANCIAL STATISTICS - CONTINUING OPERATIONS (unaudited)
Three months ended Nine months ended
December 31 Better/ December 31 Better/
2006 2005 (Worse) 2006 2005 (Worse)
Restated Restated
Revenue GBPm 2,068 2,058 0.5% 6,560 6,159 6.5%
Operating profit GBPm 129 176 (26.7)% 571 596 (4.2)%
Profit before tax GBPm 113 166 (31.9)% 584 518 12.7%
Profit after tax GBPm 107 124 (13.7)% 509 376 35.4%
(Loss)/profit from discontinued
operations GBPm (1) (1) nm (81) 8 nm
Net assets GBPm 2,490 1,953 27.5% 2,490 1,953 27.5%
Basic earnings per share p 9.1 10.5 (13.3)% 43.8 32.7 33.9%
Three months ended Nine months ended
December 31 Better/ December 31 Better/
2006 2005 (Worse) 2006 2005 (Worse)
Restated Restated
TOTAL GROUP OPERATIONS
TRAFFIC AND CAPACITY
RPK (m) 27,073 27,032 0.2% 86,848 83,362 4.2%
ASK (m) 36,563 36,265 0.8% 111,916 108,299 3.3%
Passenger load factor (%) 74.0 74.5 (0.5)pts 77.6 77.0 0.6pts
CTK (m) 1,208 1,324 (8.8)% 3,611 3,691 (2.2)%
RTK (m) 3,957 4,032 (1.9)% 12,384 12,031 2.9%
ATK (m) 5,629 5,730 (1.8)% 17,332 17,084 1.5%
Overall load factor (%) 70.3 70.4 (0.1)pts 71.5 70.4 1.1pts
Passengers carried (000) 7,878 7,794 1.1% 25,799 24,962 3.4%
Tonnes of cargo carried (000) 198 211 (6.2)% 585 593 (1.3)%
FINANCIAL
Operating margin (%) 6.2 8.6 (2.4)pts 8.7 9.7 (1.0)pts
Passenger revenue per RPK (p) 6.49 6.37 1.9% 6.49 6.26 3.7%
Passenger revenue per ASK (p) 4.81 4.75 1.3% 5.04 4.82 4.6%
Cargo revenue per CTK (p) 13.41 13.37 0.3% 13.46 12.98 3.7%
Total traffic revenue per RTK (p) 48.50 47.07 3.0% 49.43 47.34 4.4%
Total traffic revenue per ATK (p) 34.09 33.12 2.9% 35.32 33.34 5.9%
Total expenditure on operations
per RTK (p) 49.00 46.68 (5.0)% 48.36 46.24 (4.6)%
Total expenditure on operations
per ATK (p) 34.45 32.84 (4.9)% 34.55 32.56 (6.1)%
Average fuel price before hedging
(US cents/US gallon) 196.03 200.47 2.2% 212.89 187.73 (13.4)%
TOTAL AIRLINE OPERATIONS (Note 1)
OPERATIONS
Average Manpower Equivalent (MPE) 42,197 43,718 3.5% 42,882 43,980 2.5%
ATKs per MPE (000) 133.4 131.1 1.8% 404.2 388.4 4.0%
Aircraft in service at period end 243 289 (46) 243 289 (46)
Note 1: Excludes non airline activity companies, principally, Airmiles Travel
Promotions Ltd, BA Holidays Ltd, BA Travel Shops Ltd and Speedbird Insurance
Company Ltd.
SUMMARY
Turnover
For the three month period, Group turnover - - at GBP2,068 million - - was up
0.5% on a flying programme 1.8% smaller in ATKs. Passenger yields were up 1.9%
per RPK; seat factor was down 0.5 points at 74.0% on capacity 0.8% higher in
ASKs.
Cargo volumes for the quarter (CTKs) were down 8.8% compared with last year,
with yields (revenue/CTK) up 0.3%. The reduction in CTKs is partially due to a
smaller freighter programme this year versus last.
For the nine month period, turnover improved by 6.5% to GBP6,560 million on a
flying programme 1.5% larger in ATKs. Passenger yields were up 3.7% per RPK with
seat factor up 0.6 points at 77.6% on capacity 3.3% higher in ASKs. The
improvements versus last year are driven by the longhaul operation. Longhaul
premium point-to-point traffic in particular has seen improvements in both
volume and yield.
For the nine month period, cargo volumes were down 2.2%, with yields up 3.7%.
Overall load factor for the quarter was down 0.1 points at 70.3%, and for the
nine months up 1.1 points at 71.5%.
Costs
For the quarter, unit costs (pence/ATK) increased by 4.9% on the same period
last year as a result of a total cost increase of 3.0% on capacity 1.8% lower in
ATKs. The reduction in ATKs was partly due to one less freighter in the third
quarter this year versus last, and the total cost increase is mainly driven by
the increase in the cost of fuel. Excluding fuel, unit costs were up 2.6%.
The 3.0% increase in costs is primarily driven by a fuel cost increase of 11.2%
due to the increase in fuel price net of hedging, partially offset by a smaller
flying programme and a weaker US dollar. Employee costs increased by 2.0%,
primarily due to redundancy costs in the quarter supporting the management
restructuring programme announced in December 2005 and higher pension service
costs this year versus last. These costs were partially offset by manpower
reductions and efficiency initiatives. Selling costs were down 1.9% due
predominantly to favourable exchange movements. Engineering spend was down 8.2%
in the quarter primarily driven by favourable exchange movements as a result of
the weaker dollar, in addition to cost savings from a reduced freighter
operation.
Non Operating Items
Interest income at GBP34 million in the quarter was GBP10 million higher than
last year reflecting higher cash balances and the impact of changes in interest
rates. The loss of GBP4 million on the sale of fixed assets and investments
primarily relates to scrappage costs as a result of the lease termination of
Jubilee House at Gatwick. The share of profits in associates at GBP5 million was
GBP20 million lower than last year. The GBP25 million profit last year included
our share of the profit of Iberia following the disposal of its investment in
Amadeus.
For the nine month period, interest expense was GBP117 million, GBP42 million
lower than last year due to the impact of lower debt levels. Interest income was
GBP97 million, GBP30 million higher than last year, reflecting the higher cash
balances. The retranslation of currency borrowings generated a credit of GBP12
million, compared with a charge of GBP12 million last year. This is primarily
due to the weakening of the US dollar this year versus a strengthening US dollar
last year. Profit on sale of fixed assets and investments was GBP45 million,
mainly reflecting the GBP48 million profit on sale of the Groups' holding in
World Network Services.
Tax
The tax charge for the three month period, on profits from continuing operations
of GBP113 million, was GBP6 million giving an effective rate of 5%. The tax rate
in the three month period benefited from the recognition of an advance
corporation tax asset of GBP20 million which was previously written off. The tax
credit for the three month period on the loss from discontinuing operations of
GBP2 million is GBP1 million.
The charge for the nine month period on profits from continuing operations of
GBP584 million was GBP75 million. Excluding the effects of provision releases,
the effective rate for the nine month period is 15% compared with 17% for the
half year to September 30, 2006. The credit for the nine month period on losses
from discontinued operations of GBP102 million is GBP21 million.
UK corporation tax payments in the quarter totalled GBP35 million and in the
nine month period GBP91 million.
Earnings Per Share
The total earnings attributable to shareholders for the three months was GBP103
million, equivalent to 9.0 pence per share, compared with last year's earnings
per share of 10.4 pence.
For the nine month period, the profit attributable to shareholders was GBP418
million, equivalent to 36.7 pence per share, compared with earnings of 33.4
pence per share last year.
Net Debt / Total Capital Ratio
Borrowings, net of cash and short term loans and deposits, were GBP866 million
at December 31, down GBP775 million since the start of the year. The net
debt/total capital ratio reduced by 18.4 points from March 31 2006 to 25.8%. The
net debt/ total capital ratio including operating leases was down 15.9 points
from March 31 to 37.1%.
Cash Flow
During the nine months the Group generated a positive cash flow from operating
activities of GBP608 million, GBP201 million lower than last year. Including
current interest bearing deposits, the cash position at December 31, 2006 was
GBP2,643 million, an increase of GBP203 million compared with March 31, 2006.
Aircraft Fleet
The continuing operations Group fleet in service at December 31, 2006 was 243.
Future deliveries have increased by 4 following the conversion of 4 Airbus
options into orders for 4 A320s to replace 4 A320 aircraft due to leave the
fleet from 2008.
The planned disposal of the regional business of BA Connect will result in the
transfer of the Turboprops, Embraer RJ145 and British Aerospace 146 fleets to
Flybe. This will further simplify the BA Group fleet.
BA Connect
In accordance with IFRS 5, the disposal of BA Connect has been treated as
discontinued operations. This is due to the fact that BA Connect represents a
separate major line of business and the operations and cashflows can be clearly
distinguished for financial reporting purposes.
The loss from discontinued operations in the nine month period was GBP81
million, which includes the GBP106 million impairment charge partially offset by
a tax credit of GBP21 million.
Pensions
Having concluded 9 months' consultation with the Trades Unions, the BA Forum
agreed to recommend changes to the New Airways Pension Scheme (NAPS) to address
its GBP2.1 billion actuarial deficit. The company has agreed to make a one-off
contribution of GBP800 million into the scheme subject to acceptance of benefit
changes. Together with a one-off employee saving of GBP400 million and changes
to future benefits, the NAPS pension deficit will be reduced by more than half,
from an existing GBP2.1 billion to GBP0.9 billion and the company's annual
contributions will be around GBP280 million a year for the next ten years. This
shared solution will secure the pensions of the scheme's members and bring the
deficit and ongoing company contributions to an affordable level.
Terminal 5
Construction of the GBP4.3 billion state of the art Terminal 5 remains on time
and within budget and the terminal is now 90 per cent complete. The terminal,
which will be capable of handling 30 million customers a year, will enable us to
provide new levels of customer experience and well as unrivalled opportunities
to modernise and grow our business. The main lounge areas and two important
airfield areas have now been handed over to BA. Our schedule to begin
operational testing is on track for September this year ahead of opening in
March 2008.
Competition Investigations
Investigations by competition authorities in the USA, Europe, Canada and New
Zealand into alleged anti-competitive activity in relation to the cargo
business, and in the UK and USA into alleged anti-competitive activity in
relation to passenger transportation pricing, including longhaul fuel
surcharges, are ongoing. As these investigations have not been completed, it is
not possible to assess the outcome and, as a result, no provision has been made.
Operational Disruption
The operation continued to see an impact from the August security measures as
common EU baggage standards were not agreed until mid-way through the quarter,
and more restrictive rules on hand baggage continue to apply in the UK. As a
result, transfer volumes at Heathrow are still down. The baggage system operated
by the BAA at Heathrow's Terminal 4 failed twice in December, and severe fog led
to the cancellation of 800 flights in the pre-Christmas peak period. The impact
of all these external factors is estimated at GBP40 million.
We are now re-focussing on delivering excellent customer service and regaining
our customers' loyalty.
Industrial Relations
On January 29, an agreement was reached with the T&G and planned strikes were
averted. Agreements were reached on a range of issues, including a new two-year
pay deal for all cabin crew. Both parties also recognized that a fresh start is
needed to the relationship, and work will begin on developing a constructive and
professional relationship.
Outlook
The market continues to show good demand in premium cabins. The weakness in some
non-premium segments is also still a feature. The revenue outlook for the fourth
quarter has been impacted by the threat of industrial action by the T&G in
respect of some 11,000 cabin crew. While the strike was averted, the estimated
revenue loss is still some GBP80 million. Revenue guidance for the full year is
now 3.25 - 3.75% growth.
While cost control remains strong, full year costs excluding fuel are expected
to be some GBP50 million higher than last year. This reflects higher costs in
the first quarter. Our full year fuel guidance has been revised down by GBP40
million reflecting the reduction in fuel prices. The fuel bill will now be
accounted for on a continuing operations basis, and is expected to be some
GBP1.95 billion.
Certain information included in these statements is forward-looking and involves
risks and uncertainties that could cause actual results to differ materially
from those expressed or implied by the forward looking statements.
Forward-looking statements include, without limitation, projections relating to
results of operations and financial conditions and the Company's plans and
objectives for future operations, including, without limitation, discussions of
the Company's Business Plan programs, expected future revenues, financing plans
and expected expenditures and divestments. All forward-looking statements in
this report are based upon information known to the Company on the date of this
report. The Company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future events
or otherwise.
It is not reasonably possible to itemize all of the many factors and specific
events that could cause the Company's forward looking statements to be incorrect
or that could otherwise have a material adverse effect on the future operations
or results of an airline operating in the global economy. Information on some
factors which could result in material difference to the results is available in
the Company's SEC filings, including, without limitation the Company's Report on
Form 20-F for the year ended March 2006.
The estimated impacts of the disruption in Quarter 3 and the averted strikes in
Quarter 4 reflect the direct costs of the measures and the estimated revenue
impacts, both direct and indirect. The estimates of GBP40 million and GBP80
million respectively, are based on assumptions the company considers reasonable,
but are judgemental.
CONSOLIDATED INCOME STATEMENT (unaudited)
Three months ended Nine months ended
December 31 Better/ December 31 Better/
2006 GBPm 2005 GBPm (Worse) 2006 GBPm 2005 GBPm (Worse)
Restated Restated
Traffic Revenue*
Passenger 1,757 1,721 2.1% 5,635 5,217 8.0%
Cargo 162 177 (8.5)% 486 479 1.5%
1,919 1,898 1.1% 6,121 5,696 7.5%
Other revenue 149 160 (6.9)% 439 463 (5.2)%
TOTAL REVENUE 2,068 2,058 0.5% 6,560 6,159 6.5%
Employee costs 566 555 (2.0)% 1,717 1,649 (4.1)%
Depreciation, amortisation and impairment 174 180 3.3% 530 535 0.9%
Aircraft operating lease costs 19 21 9.5% 61 66 7.6%
Fuel and oil costs 457 411 (11.2)% 1,476 1,150 (28.3)%
Engineering and other aircraft costs 101 110 8.2% 309 329 6.1%
Landing fees and en route charges 123 130 5.4% 397 394 (0.8)%
Handling charges, catering and
other operating costs 232 238 2.5% 708 697 (1.6)%
Selling costs 106 108 1.9% 305 318 4.1%
Currency differences (12) (100.0)% 23 (15) nm
Accommodation, ground equipment
and IT costs 161 141 (14.2)% 463 440 (5.2)%
TOTAL EXPENDITURE ON OPERATIONS 1,939 1,882 (3.0)% 5,989 5,563 (7.7)%
OPERATING PROFIT 129 176 (26.7)% 571 596 (4.2)%
Fuel derivative (losses)/gains** (5) (4) (25.0)% (30) 9 nm
Finance costs (46) (50) 8.0% (117) (159) 26.4%
Finance income 34 24 41.7% 97 67 44.8%
Financing income and expense
relating to pensions (4) (4) (12) (12)
Retranslation credits/(charges)
on currency borrowings 3 (2) nm 12 (12) nm
(Loss)/profit on sale of fixed assets
and investments (4) 1 nm 45 nm
Share of profits in associates 5 25 (80.0)% 5 27 (81.5)%
Income relating to fixed asset
investments 1 nm 13 2 nm
PROFIT BEFORE TAX 113 166 (31.9)% 584 518 12.7%
Tax (6) (42) 85.7% (75) (142) 47.2%
PROFIT AFTER TAX FROM
CONTINUING OPERATIONS 107 124 (13.7)% 509 376 35.4%
(Loss)/profit from Discontinued Operations
(including tax) (1) (1) nm (81) 8 nm
PROFIT AFTER TAX 106 123 (13.8)% 428 384 11.5%
Attributable to:
Equity holders of the parent 103 117 (12.0)% 418 371 12.7%
Minority interest 3 6 (50.0)% 10 13 (23.1)%
106 123 (13.8)% 428 384 11.5%
nm: Not meaningful
* Fuel surcharges of GBP148 million for the quarter and GBP375 million for the
nine months previously presented within 'other revenue' in the December 2005
income statement, have been reclassified and included within traffic revenue.
** Fuel derivative (losses)/gains reflect the ineffective portion of unrealised
gains and losses on fuel derivative hedges required to be recognised through
the income statement under IAS 39.
Three months ended Nine months ended
December 31 Better/ December 31 Better/
2006 GBPm 2005 GBPm (Worse) 2006 GBPm 2005 GBPm (Worse)
Restated Restated
Earnings per share(continuing operations):
Basic 9.1p 10.5p (13.3)% 43.8p 32.7p 33.9%
Fully diluted 9.0p 10.4p (13.5)% 43.4p 32.1p 35.2%
Earnings per share(discontinuing operations):
Basic (0.1)p (0.1)p nm (7.1)p 0.7p nm
Fully diluted (0.1)p (0.1)p nm (7.1)p 0.7p nm
Earnings per share (Total):
Basic 9.0p 10.4p (13.5)% 36.7p 33.4p 9.9%
Fully diluted 8.9p 10.3p (13.6)% 36.3p 32.8p 10.7%
nm: Not meaningful
CONSOLIDATED BALANCE SHEET (unaudited)
December 31 December 31 March 31
2006 GBPm 2005 GBPm 2006 GBPm
NON-CURRENT ASSETS Restated
Property, plant and equipment
Fleet 6,204 6,703 6,606
Property 931 949 974
Equipment 281 366 302
7,416 8,018 7,882
Goodwill 40 72 72
Landing rights 126 117 115
Other intangible assets 37 48 46
203 237 233
Investments in associates 108 130 131
Other investments 50 33 33
Employee benefit assets 123 138 137
Other financial assets 32 105 89
TOTAL NON-CURRENT ASSETS 7,932 8,661 8,505
CURRENT ASSETS AND RECEIVABLES
Expendable spares and other inventories 72 98 83
Trade receivables 526 589 685
Other current assets 339 480 458
Assets held for sale 98 1 3
Other current interest bearing deposits 1,118 1,164 1,533
Cash and cash equivalents 1,525 945 907
2,643 2,109 2,440
TOTAL CURRENT ASSETS AND RECEIVABLES 3,678 3,277 3,669
TOTAL ASSETS 11,610 11,938 12,174
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Issued share capital 288 283 283
Share Premium 929 888 888
Investment in own shares (11) (2)
Other reserves 1,084 571 690
TOTAL SHAREHOLDERS' EQUITY 2,290 1,740 1,861
MINORITY INTEREST 200 213 213
TOTAL EQUITY 2,490 1,953 2,074
NON-CURRENT LIABILITIES
Interest bearing long-term borrowings 3,014 3,794 3,602
Employee benefit obligations 1,777 1,808 1,803
Provisions for deferred tax 776 912 896
Other provisions 154 125 135
Other long-term liabilities 204 253 232
TOTAL NON-CURRENT LIABILITIES 5,925 6,892 6,668
CURRENT LIABILITIES
Current portion of long-term borrowings 495 493 479
Trade and other payables 2,374 2,483 2,822
Current tax payable 124 77 75
Short-term provisions 25 40 56
Liabilities associated with assets held for sale 177
TOTAL CURRENT LIABILITIES 3,195 3,093 3,432
TOTAL EQUITY AND LIABILITIES 11,610 11,938 12,174
CONSOLIDATED CASHFLOW STATEMENT (unaudited)
Nine months ended
December 31 Better/
2006 GBPm 2005 GBPm (Worse)
Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Operating profit 571 596 (25)
(Loss)/profit from discontinued operations (81) 8 (89)
Depreciation, amortisation and impairment 648 541 107
Operating cashflow before working capital changes 1,138 1,145 (7)
Decrease in inventories and other receivables 168 52 116
Decrease in trade and other payables and provisions (460) (208) (252)
Other non-cash movements (21) 9 (30)
Cash generated from operations 825 998 (173)
Interest paid (126) (149) 23
Taxation (91) (40) (51)
NET CASH FLOW FROM OPERATING ACTIVITIES 608 809 (201)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (208) (184) (24)
Purchase of intangible assets (18) (3) (15)
Purchase of interest in associates (13) (5) (8)
Proceeds from the sale of trade investments 52 52
Proceeds from sale of property, plant and equipment 7 9 (2)
Costs of disposal of subsidiary companies (6) 6
Proceeds from disposal of interests in associates 3 1 2
Interest received 70 55 15
Interest income from other investments 4 4
Dividends received 3 22 (19)
Decrease/(increase) in interest bearing deposits 394 (29) 423
NET CASH FLOW FROM INVESTING ACTIVITIES 294 (140) 434
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings (47) (40) (7)
Payment of finance lease liabilities (260) (241) (19)
Exercise of share options 45 18 27
Purchase of own shares (12) (12)
Distributions made to holders of perpetual securities (10) (10)
NET CASH FLOW FROM FINANCING ACTIVITIES (284) (273) (11)
Net increase in cash and cash equivalents 618 396 222
Net foreign exchange difference 1 (1)
Cash and cash equivalents at April 1 907 548 359
CASH AND CASH EQUIVALENTS AT DECEMBER 31 1,525 945 580
These summary financial statements were approved by the Directors on
February 1, 2007.
NOTES TO THE ACCOUNTS (unaudited)
For the period ended December 31, 2006
1 BASIS OF PREPARATION
The basis of preparation and accounting policies set out in the Report and
Accounts for the year ended March 31, 2006 have been applied in the
preparation of these summary financial statements. These are in accordance
with the recognition and measurement criteria of International Financial
Reporting Standards (IFRS)* issued by the International Accounting Standards
Board (IASB) and with those of the Standing Interpretations issued by the
International Financial Reporting Interpretations Committee (IFRIC) of the
IASB. These interim financial statements have not been prepared in
accordance with IAS 34 - 'Interim Reporting' as permitted under IFRS.
The comparative information presented for the quarter and nine months ended
December 31, 2005 has been restated to reclassify the operations of BA
Connect as a discontinued operation. In addition, the comparative
information has been restated to reflect fuel surcharges of GBP148 million
and GBP375 million respectively, previously presented within 'other
revenue', reclassified and included within 'traffic revenue'.
In accordance with the Group's first full IFRS financial statements for the
year ended March 31, 2006, certain presentational changes have been made to
the comparative information for the quarter and nine months ended December
31, 2005. Provisions with a value of GBP25 million, previously shown within
'other provisions' have been re-presented in 'short-term provisions'. In
addition, GBP111 million and GBP15 million of accruals have been
reclassified from other long-term liabilities to other provisions and trade
and other payables to short-term provisions respectively.
* For the purposes of these statements IFRS also include International
Accounting Standards (IAS).
2 FINANCE COSTS / INCOME
Three months ended Nine months ended
December 31 December 31
2006 GBPm 2005 GBPm 2006 GBPm 2005 GBPm
FINANCE COSTS
Interest payable on bank and other loans and
finance charges payable under finance leases and
hire purchase contracts 47 50 135 159
Release of prior year provisions (15)
Interest capitalised (1) (3)
Total finance costs 46 50 117 159
FINANCE INCOME
Bank interest receivable 34 24 97 67
Total finance income 34 24 97 67
Total financing income and expense relating to pensions 4 4 12 12
Retranslation credits/(charges) on currency borrowings 3 (2) 12 (12)
3 PROFIT/(LOSS) ON SALE OF FIXED ASSETS AND INVESTMENTS
Three months ended Nine months ended
December 31 December 31
2006 GBPm 2005 GBPm 2006 GBPm 2005 GBPm
Net profit on the disposal 48
of WNS
Net (loss)/profit on the disposal of
property, plant and
equipment (4) 1 (2)
Net loss on disposal of interest in associates (1)
(4) 1 45
4 TAX The tax charge for the quarter on profits from continuing operations
of GBP113 million is GBP6 million; GBP36 million of which represents
current tax payable and GBP(30) million is a deferred tax credit. The
charge benefited from the recognition of GBP20 million of Advance
Corporation Tax that was previously written off to the income statement.
The tax credit for the quarter on the loss from discontinuing operations of
GBP2 million is GBP(1) million.
5 DISCONTINUED OPERATIONS
On November 3, 2006 the Group publicly announced the decision of its Board
of Directors to sell the regional operations of BA Connect to Flybe. BA
Connect was previously reported in the Group's Regional airline business
segment.
BA Connect also operates from London City Airport and between Manchester
and New York City. These services will not form part of the proposed sale
nor will the regional ground handling business, British Airways Regional
Ltd.
In accordance with IFRS 5 " Non-current Assets Held for Sale and
Discontinued Operations", costs and expenses that are expected to continue
subsequent to the disposal of BA Connect, along with previously allocated
corporate overheads, have not been included in discontinued operations.
Further disposal costs are anticipated in the next quarter.
The results from the discontinued operations, excluding previously
allocated corporate overheads, which have been included in the consolidated
income statement, are as follows:
Three months ended Nine months ended
December 31 December 31
2006 GBPm 2005 GBPm 2006 GBPm 2005 GBPm
Revenue 59 72 197 235
Total expenditure on operations (60) (72) (190) (219)
Impairment (106)
Operating (loss)/profit (1) (99) 16
Net finance costs (1) (2) (3) (5)
(Loss)/profit before tax for the year (2) (2) (102) 11
Tax 1 1 21 (3)
(Loss)/profit from discontinued operations (1) (1) (81) 8
The cash flows relating to the discontinued operations are as follows:
Nine months ended
December 31
2006 GBPm 2005 GBPm
Operating cash flows (12) (24)
Investing cash flows (1) 1
Financing cash flows (10) (14)
Cash and cash equivalents at December 31 (23) (37)
6 EARNINGS PER SHARE Basic earnings per share for the quarter ended
December 31, 2006 are calculated on a weighted average of 1,144,186,000
ordinary shares (December 2005: 1,128,475,000; March 2006: 1,116,178,000)
as adjusted for shares held for the purposes of employee share ownership
plans including the Long Term Incentive Plan. Diluted earnings per share
for the quarter ended December 31, 2006 are calculated on a weighted
average of 1,156,405,000 ordinary shares (December 2005: 1,138,143,000;
March 2006: 1,138,545,000).
The number of shares in issue at December 31, 2006 was 1,150,128,000
(December 31, 2005: 1,130,882,000; March 31, 2006: 1,130,882,000) ordinary
shares of 25 pence each.
7 RECONCILIATION OF MOVEMENT IN NET DEBT TO CHANGES IN CASH FLOWS
Nine months ended
December 31
2006 GBPm 2005 GBPm
Increase in cash and cash equivalents during the period 618 396
Net cash used in repayment of long-term borrowings 307 281
Decrease in interest bearing deposits (394) 29
Reclassification to Liabilities associated with assets held for sale 89
Change in net debt resulting from cash flows 620 706
New finance leases taken out and hire
purchase arrangements made (6) (7)
Conversion of Convertible Capital Bonds 2005 112
Exchange and other non cash movements 161 (67)
Movement in net debt during the period 775 744
Net debt at April 1 (1,641) (2,922)
Net debt at December 31 (866) (2,178)
Net debt comprises the current and non-current portions of long-term
borrowings, convertible long-term borrowings and overdrafts, less cash and
cash equivalents plus interest-bearing short-term deposits.
8 ANALYSIS OF LONG-TERM BORROWINGS
December 31 December 31 March 31
2006 GBPm 2005 GBPm 2006 GBPm
Interest bearing long-term borrowings comprise:
Loans 899 1,081 1,030
Finance Leases 1,288 1,452 1,418
Hire purchase arrangements 827 1,261 1,154
3,014 3,794 3,602
Current portion of long-term borrowings comprise:
Loans 93 62 86
Finance Leases 96 121 105
Hire purchase arrangements 306 310 288
495 493 479
9 RESERVES
December 31 December 31 March 31
2006 GBPm 2005 GBPm 2006 GBPm
Restated
Balance at April 1 690 152 152
Transitional effects from the adoption of IAS 39 and IAS 32 183 183
Profit for the period 418 374 451
Exchange and other movements (24) (138) (96)
1,084 571 690
10 COMPETITION INVESTIGATIONS Investigations by competition authorities in
the USA, Europe, Canada and New Zealand into alleged anti-competitive
activity in relation to the cargo business, and in the UK and USA into
alleged anti-competitive activity in relation to passenger transportation
pricing, including longhaul fuel surcharges, are ongoing. As these
investigations have not been completed, it is not possible to assess the
outcome and, as a result, no provision has been made.
11 The figures for the three months and nine months ended December 31, 2006
and 2005 are unaudited and do not constitute full accounts within the
meaning of Section 240 of the Companies Act 1985. The financial statements
for the year ended March 31, 2006 which have been delivered to the
Registrar of Companies and on which the auditors have issued an unqualified
audit report, did not contain a statement under Section 237 of the
Companies Act 1985.
INDEPENDENT REVIEW REPORT TO BRITISH AIRWAYS Plc
Introduction We have been instructed by the Company to review the financial
information for the three months and nine months ended December 31, 2006, which
comprises the Consolidated Income Statement, Consolidated Balance Sheet,
Consolidated Cash Flow Statement and the related notes 1 to 11. We have read the
other information contained in the Interim Results and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
This report is made solely to the Company in accordance with guidance contained
in Bulletin 1999/4 'Review of Interim Financial Information' issued by the
Auditing Practices Board. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company, for our work,
for this report, or for the conclusions we have formed.
Directors' responsibilities
The Interim Results, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the Interim Results in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceeding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
'Review of interim financial information' issued by the Auditing Practices Board
for use in the United Kingdom. A review consists principally of making enquiries
of Group management and applying analytical procedures to the financial
information and underlying financial data, and based thereon, assessing whether
the accounting policies and presentation have been consistently applied, unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with
International Standards on Auditing (UK and Ireland) and therefore provides a
lower level of assurance than an audit. Accordingly we do not express an audit
opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the three months
and nine months ended December 31, 2006.
Ernst & Young LLP
London
February 1, 2007
UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (US GAAP) INFORMATION
(unaudited and for information only)
The accounts have been prepared in accordance with the measurement and
recognition requirements of International Financial Reporting Standards (IFRS)
which differ in certain respects from those generally accepted in the United
States. Comparative information for the quarter and nine months ended December
31, 2006 has been restated and reflects the changes described in Note 1 to the
accounts above.
The adjusted net income and shareholders' equity applying US GAAP are set out
below:
Three months ended Nine months ended
December 31 December 31
2006 GBPm 2005 GBPm 2006 GBPm 2005 GBPm
Restated Restated
Profit for the period attributable to equity holders of
the parent as reported in the Group income statement 103 117 418 371
US GAAP adjustments (49) (130) (145) (257)
Net income as so adjusted to
accord with US GAAP 54 (13) 273 114
Net income per Ordinary Share
as so adjusted
Basic 4.7p (1.2p) 24.0p 10.3p
Diluted 4.7p (1.2p) 23.8p 10.2p
Net income per American Depositary Share
as so adjusted
Basic 47p (12p) 240p 103p
Diluted 47p (12p) 238p 102p
Three months ended Nine months ended
December 31 December 31
2006 GBPm 2005 GBPm 2006 GBPm 2005 GBPm
Profit from the period pertaining to Continuing Operations: 104 118 499 363
US GAAP adjustments (49) (130) (177) (257)
Net income as so adjusted to
accord with US GAAP 55 (12) 322 106
Net income per share from Continuing Operations as so adjusted
Basic 4.8p (1.1p) 28.2p 9.6p
Diluted 4.7p (1.1p) 28.0p 9.5p
Net income per American Depositary Share from Continuing Operations
as so adjusted
Basic 48p (11p) 282p 96p
Diluted 47p (11p) 280p 95p
(Loss)/Profit from the period pertaining to Discontinued (1) (1) (81) 8
Operations
US GAAP adjustments 32
Net income as so adjusted to accord with US GAAP (1) (1) (49) 8
Net income per share from Discontinued Operations as so adjusted
Basic (0.1p) (0.1p) (4.2p) 0.7p
Diluted (0.0p) (0.1p) (4.2p) 0.7p
Net income per American Depositary Share from Discontinued Operations
as so adjusted
Basic (1p) (1p) 42p 7p
Diluted (0p) (1p) 42p 7p
December 31 March 31
2006 GBPm 2005 GBPm 2006 GBPm
Restated
Shareholders' equity as reported in the Group balance sheet 2,290 1,740 1,861
US GAAP adjustments 252 436 445
Shareholders' equity
as so adjusted to accord with US GAAP 2,542 2,176 2,306
AIRCRAFT FLEET
(unaudited and outwith the scope of the Independent Review)
Number in service with Group companies at December 31, 2006
On Balance Sheet Off Balance Total December Changes Future Options
aircraft Sheet Aircraft 2006 Since deliveries
September
2006
(Note 4) (Note 5)
AIRLINE OPERATIONS (Note 1)
Boeing 747-400 57 57
Boeing 777 40 3 43
Boeing 767-300 21 21
Boeing 757-200 13 13
Airbus A319 (Note 1) 21 12 33 28
Airbus A320 8 18 26 (1) 10
Airbus A321 7 7 4
Boeing 737-300 5 5
Boeing 737-400 19 19
Boeing 737-500 9 9
Avro RJ100 (Note 2) 10 10
CONTINUING TOTAL (Note 3) 186 57 243 (1) 14 28
Turboprops 7 7
Embraer RJ145 16 12 28
British Aerospace 146 4 4
DISCONTINUED TOTAL 20 19 39
GROUP TOTAL 206 76 282 (1) 14 28
Notes:
1. Certain future deliveries and options include reserved delivery positions,
and may be taken as any A320 family aircraft.
2. Excludes 6 Avro RJ100 sub-leased to Swiss International Airlines.
3. Includes those operated by British Airways Plc and BA Cityflyer.
4. Future year deliveries have increased by 4 to 14 to replace 4 A320 aircraft
due to leave the fleet from 2008.
5. Excludes 10 secured delivery positions for Boeing 777 aircraft.