British Airways out of the red and into the black

Branwell Johnson

British Airways (BA) has posted a pre-tax profit of £158m for the first half as the airline begins the final countdown to its merger with Iberia.

This compares with a loss of £292m for the comparable six months to September 30 period last year.

The airline attributes the turnaround to a reduction in on-fuel costs and improvements in passenger yield.

The airline faced a number of challenges this year, including the disruption caused by Unite air cabin crew strikes and the shutting of air space due to the Icelandic volcano ash cloud.

Looking ahead, chief executive Willie Walsh says: “While positive, the economic environment continues to be subject to uncertainty, to which the increase in Air Passenger Duty {due to rise next week} is unhelpful. We continue to focus on managing our costs.”

Walsh says that improving customer service was the driver of BA’s transformation at the Abta travel conference last week.

BA reported total revenue up 8.4% for the first half of the year and passenger revenue up 7.9%.

The airline installed a new first class cabin on 12 aircraft during the period and plans to fit the cabin across the whole of the long haul fleet by the end of 2011.

It recently appointed Kerris Bright the position of head of global marketing.

BA expects to complete the merger with Iberia in January 2011. The two airline brands will remain but there will be one operating company with merged back office functions.

Read an interview with BA UK & Ireland head of sales and marketing Richard Tams here

YouGov Insight:

Travel Insurance

·        In terms of underwriter premiums, Axa is acknowledged in the market as the largest travel underwriter (around 23% of premiums) followed some way back by Aviva and RBS (both around 12%).

·        According to YouGov SixthSense research, in August 2010, 34% of adults with annual travel insurance had packaged bank accounts (virtually all of which come with annual travel cover), while only 6% of those with single trip cover owned such accounts.

·        UK consumers are more likely to switch from single to annual travel insurance coverage as 1 in 5 people who cancel their single travel insurance policy already hold an annual policy.

·        75% of UK adults who quit a travel insurance policy do not have another travel insurance policy lined up.

·        Two thirds of YouGov respondents who claim to have cancelled an annual travel insurance policy in the past did so during the recession.

Click here for more information on this YouGov market report

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