Terror disruption costs BA £100 million

03-11-2006

Terror disruption costs BA £100 million
The aftermath of this summer's alleged terror plot involving transatlantic flights made a £100 million dent in British Airways' profits.

UK airports were hit with lengthy delays and cancellations in August, with new security restrictions on hand luggage introduced in the wake of the alleged plot only recently relaxed.

BA today said its operating profit for the three months ending August was £134 million, compared to £261 million in 2005, while its half-year profit was £345 million, an annual fall of 21 per cent.

The airline has also announced the principle sale of low-cost subsidiary BA Connect to Flybe for an undisclosed amount.

Included in today's results is the £106 million write-down from the sale of the short-haul service, which when excluded from the results reveals a marginal eight per cent profit drop for the firm.

Willie Walsh, BA chief executive, today insisted that his company's results were still healthy, despite the detrimental effect of the disruption associated with the alleged terror plot.

"Given the significant impact of the security disruptions, estimated at a cost of some £100 million, these are good results. Despite the extremely difficult operational environment, we have delivered improved revenue," he said.

Mr Walsh explained that the sale of BA Connect, which will be completed in March 2007 and in which BA will retain a 15 per cent stake, reflected short-haul flights no longer being part of the airline's "strategic business".

The chief executive added that tackling BA's £2.1 billion pension scheme remained the company's number one priority, pushing its proposed fleet expansion back into the pipeline.


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