I am sure most peeps will know this is my favourite airline - I fly them and I buy them.

Currently I hold a quarter unit as a longer term investment which is also useful for shareholder benefits.

I will be looking to substantially add at the right time and not afraid to trade them either intraday or more probably as a swing trade.


ains




Shadow of conflict looms large over British Airways as firm fights to recover

TRACEY BOLES - Scotland on Sunday

BRITISH Airways will warn that the prospect of war with Iraq casts a long shadow over its full-year this week when it posts third quarter figures in line with expectations.

Lord Marshall, the BA chairman, is expected to tell analysts that political uncertainty could push the airline, still struggling to recover from the effects of September 11, further into reverse.

"Iraq is a key driver for everything," said a source close to the airline.

BA has admitted privately to analysts that transatlantic bookings for this March are "appalling" as the uncertainty stirred up by the prospect of war exerts an influence. Earnings estimate downgrades are now highly likely.

However, analysts believe a loss for the full year is still not on the cards.

Pre-tax estimates for the full year currently stand at up to 140m. BAs performance, which represents a strong recovery from the 180m loss posted in the equivalent quarter after September 11, has been driven by a vigorous cost-cutting programme rather than by revenue, which is still flat.

It will announce tomorrow that it is on track to achieve cost savings of 450m by the end of March through a process of shedding jobs and loss-making routes under its future size and shape strategy.

By the end of next month 10,000 jobs will have gone under the programme. "BA has weathered the storm better than most by getting costs under control," said one analyst. "In Europe, only Iberia has done likewise."

Third quarter operating profits are expected to be around 30m to 40m, in line with analysts expectations, with pre-tax figures between a 10m loss and 5m profit. The consensus is break even.

The airline has impressed experts by taking the threat posed by low-cost carriers seriously.

Geopolitical and economic problems are affecting demand air travel, especially on long-haul routes. BAs premium services are still under pressure, recent traffic figures revealed.

A speedy Gulf war will lead to a relief rally for the airline sectors shares which are depressed at the moment. However, BA itself has warned that prolonged conflict could trigger a slump in aviation equivalent to that seen after September 11.

Chris Tarry, former aviation analyst at Commerzbank who now runs CTAIRA said: "I believe that the last quarter has been very tough on the revenue side and indeed they have indicated this themselves.

"Unfortunately the outlook is no better - even without a war. The reality of the economic situation in the UK was underlined with the rate cut.

"Add to that the structural downward shift in fare levels and then the uncertainty over war - it doesnt bode well.

"Furthermore, given the uncertainty caused by Iraq let alone an actual war, it is pretty clear that the transatlantic market will be dire in the summer."

BA has traditionally depended on transatlantic traffic for its revenue.

Shells chairman, Sir Philip Watts, also admitted last week that the oil giant was preparing for "uncertain times" ahead.

He said Shell had looked at the range of possibilities that could occur and had "a plan for every eventuality".

Interesting to see that BAY is climbing back towards 120p as war talk is a little more muted - Tony Blair currently live on CNBC



ains

FRANKFURT, Feb 18 (Reuters) - Deutsche BA said on Tuesday its parent British Airways Plc BAY.L would negotiate with other potential parties to sell its loss-making German unit if easyJet EZJ.L does not exercise its option to buy Deutsche BA.
Deutsche BA said it would continue in its drive to become a low-cost airline in cooperation with easyJet.

Deutsche BA and the pilots union earlier confirmed that talks between the two sides over a new pay structure, crucial for a possible takeover by European no-frills giant easyJet, had collapsed on Tuesday.


SYDNEY (AFX-ASIA) - Qantas Airways Ltd will sack 2,500 staff as part of a contingency plan to be implemented to protect profit margins if war breaks out in Iraq, the Sydney Morning Herald reported, without citing sources.
It said the plan is based on the assumption that passenger numbers would fall between 15-20 pct.

Qantas lost 15 mln aud before interest and tax from its international business in the six months to December 2001, when passenger numbers fell in the aftermath of the September 11 terrorist attack on the US.

marian.carroll@afxnews.com

franklin have bought another 1.1 million share - making 76 million in all or 7%


ains

Record 131m fails to lift Qantas
Bill Condie, Evening Standard 20 February 2003

ANTAS Airways, which is 17%-owned by British Airways, more than doubled its net* profit to a record A$352.5m (131m) for the six months ended December, well above forecasts. The Aussie carrier has been one of BA's better investments, delivering about 20m in dividends* last year.




But investors concentrated on the potential damage to future profits of war in Iraq to push the shares down 10%. At one stage, they were trading at A$3.35, down 11.8%, their lowest since October 2001.


The dramatic improvement to Qantas' bottom line was due to several factors. Its half-year result last time was hit by a collapse in international air travel after 9/11, but since then traffic has rebounded sharply. Qantas' domestic market has also seen a huge shake-up, with the collapse of rival Ansett. Qantas is now by far the dominant local player, although Sir Richard Branson's discount carrier Virgin Blue is closing in, with almost 30% of the market.


Despite the record profit, Qantas chief executive Geoff Dixon was downbeat. He warned that war in Iraq could depress passenger traffic. 'Our general scenario is if there is a war of any length at all, it (traffic decline) would be 15% to 20%,' he said. 'Forward bookings for the next 16 weeks have slowed considerably in some markets, including Japan, Europe and the United Kingdom.'


Qantas will take several steps to deal with tough market conditions, he added. These would include a reduction in domestic and international operations from next month.


He also prepared the market for up to 1,500 job cuts which may be necessary in the event of war. But Dixon said none were on the cards yet.


However, he thought the airline's planned leisure travel unit would perform well: 'We expect to improve our margins as we continue to roll out our strategy to operate all-economy class aircraft on leisure routes that have little or no demand for business travel.'

I think GB has gone mad ..... the Taxes are already a significant part of short haul trip and as they say - we need this like 'a hole in the head'


ains


Holidaymakers face 100 tax hit
Jonathan Oliver, Mail on Sunday 23 February 2003

HE cost of a family holiday is set to soar by 100 under a hike in airport tax planned by Gordon Brown. The shock move, expected to bring in 1bn to the Treasury, has infuriated industry chiefs who predicted it would lead to thousands of job losses at a time of plummeting passenger numbers against a backdrop of terrorism and war with Iraq.




A Ministerial review of the charges, to be announced soon, is expected to lead to a doubling of air passenger duty from 5 to 10 for economy class flights to Europe and from 20 to 40 for journeys further afield. Such a rise would add an extra 100 to the cost of a holiday in Florida for a family of five.


But airlines claimed this would 'cripple' business and target the poor, who would no longer be able to afford foreign holidays.


The move will be seen as yet another stealth tax by the Chancellor who is struggling to fill a black hole in public finances. Industry insiders claimed the Treasury was using environmental considerations as an excuse to increase the tax.


A spokesman for the Freedom to Fly coalition, which represents airlines and airport operators, said: 'If Ministers have to consider a new tax on travellers, so be it. But they can't have picked a worse time to launch this idea. The industry is just recovering from the effects of 11 September, and now we have to brace ourselves for war in the Gulf.'


However, the rise will appease green campaigners who say the aviation industry has long been undertaxed and airport expansion-threatens to blight thousands of homes with air and noise pollution.


Airlines pay no tax on aviation fuel, an anomaly guaranteed by an international agreement dating back to the end of the Second World War, and airline tickets are exempt from VAT.


The aviation industry also benefits from duty free shopping, a perk worth 500m a year despite having been abolished for flights within the EU.


Friends of the Earth claims that aviation benefits from subsidies and tax breaks are worth 9bn a year. This means that flying from London to Manchester, for instance, is sometimes cheaper than travelling by train. They say jets are one of the biggest generators of greenhouse gases.


Paul de Zylva, of the group, said: 'The industry has grown fat with special treatment. It is time it paid an appropriate level of tax, related to the pollution it produces.'


A rise in airport tax would be a major U-turn in Treasury policy. In last year's Budget, the Chancellor announced cuts in air passenger duty for some flights.


The row over the taxes comes as the aviation industry is lobbying for nine new runways to be built in Britain. Three of these are likely to be in the South-east.


A Treasury spokesman said: 'We plan to have a discussion with stakeholders on the most effective economic instrument for ensuring the aviation industry is encouraged to take account of its contribution to global warming and air and noise pollution.'


Easyjet spokesman Toby Nichol said: 'The industry needs this like another 11 September. The way to do it is to do it as a proportion of the fare. If you pay more for your fare, you pay more tax.'




2003 Associated Newspapers Ltd.

LONDON, Feb 24 (Reuters) - British Airways BAY.L has cut services to the Gulf and is to lodge stop-over crews in Cyprus after a British worker was shot dead in Saudi Arabia and as war looms in Iraq, the carrier said on Monday.
Europe's largest airline said the decision to stop using Gulf hotels followed a change in security advice from the British Foreign Office.

"The planes will still go down to the Gulf but the crews won't stay in the hotels which we would normally use down in the Gulf region," a British Airways spokesman told Reuters. "They will spend their days of rest in Larnaca, Cyprus."

The carrier also said it was reducing the number of flights from London to Dubai to one a day from two and had suspended services to Muscat, Oman, from Abu Dhabi.

"It's all part of the safety and security of the operations," said the spokesman.

Last week, a gunman shot dead a British defence contractor working for BAE Systems in Saudi Arabia.

On Monday, the world united behind demands that Iraq begin destroying its longer-range missiles or face U.N. Security Council action that could finally trigger war.

British Airways is cutting 13,000 jobs and slashing capacity in response to a slump in demand for air travel caused by economic uncertainty and the September 11 plane attacks in the United States in 2001.

British Airways warned this month its return to profits would be under threat if war broke out.

February 25, 2003

EU seeks finish to 'national' airlines concept
By Russell Hotten



THE European Commission is to demand that member governments give up the idea of national airlines, marking another step towards allowing mergers between flag carriers.
Tomorrow the Commission is due to request that member governments drop the right to negotiate aviation deals with states outside the EU, and give airlines from other countries outside their own equal rights to fly from airports.

The move is part of the Commissions attempt to create a truly open market in European aviation, but which could still take several years to impose.

Last November the European Court of Justice gave a boost to the Commissions ambitions when it ruled that parts of the existing bilateral agreement with the United States broke European Union laws.

Airlines such as British Airways, Iberia or KLM are restricted from consolidation by national governments which have preserved national carriers as symbols of statehood.

The EU executive tomorrow will tell members that it is time to recognise airlines as community carriers, not national carriers.

The Commission claims that this would thereby unblock consolidation within the airline industry by removing existing provisions that discriminate on the basis of nationality.

The Commission says the current system of bilateral pacts is preventing the creation of a true single European aviation market and stopping much-needed consolidation.

The nationality clauses within aviation pacts complicated merger plans between British Airways and KLM in 1998. The talks were eventually aborted amid uncertainty over whether the new carrier could keep its flying rights in both countries.

Rod Eddington, BA chief executive, has said that consolidation among national airlines is essential, and he has recently hinted that he would like a deal with Iberia should regulations allow.

Meanwhile, easyJet, Europes biggest budget airline, confirmed yesterday that it wanted to acquire take-off and landing slots at Orly airport, in Paris, used by the collapsed Air Lib.

However, Ray Webster, easyJets chief executive, who was in Paris yesterday, said the acquisition of the slots could not be conditional on hiring part of Air Libs workforce.

EasyJet is drawing up plans to apply for about 20,000 slots at Orly.

02/25 08:25
EasyJet Lowered Fares 6% to Attract More Passengers (Update1)
By James Regan


London, Feb. 25 (Bloomberg) -- EasyJet Plc, Europe's largest low-cost airline, charged 6 percent lower fares in the four months through January and said first-half prices will drop in line with rival Ryanair Holdings Plc as it seeks to attract passengers.

``They are experiencing quite a bit of yield pressure here,'' said Morgan Stanley analyst Martin Borghetto, who rates the stock ``overweight.'' The comparison with Ryanair implies EasyJet's fares in the six months ended March 31 might be down as much as 10 percent from the previous year, he said.

Ryanair featured on todays Working Lunch after they cancelled 100000 trips ..... hmmmmmmm ..... interesting comparison made between them and BA in terms of service and what you get.

Pleased I fly BA and let them have the worries if something goes wrong .... end conclusion wws very much 'you get what you pay for'



ains

Credit where its due, ainsoph did buy some BAY at 95p, he posted it live then sold half of them for a good profit at a later time, he posted that too.

That is true :-)) ..... bought a few before close as a short term play @ 103p



ains

BBC - Buzz, the Stansted-based low-cost airline, is to cut 12 routes, reduce its fleet and make up to 400 workers redundant, its new owner has said.
Ryanair, which in January agreed to buy Buzz from Dutch carrier KLM, also confirmed that all Buzz flights would be grounded "for the month of April 2003, at least".

It said the restructuring plans would be presented to staff and creditors over the next few days after which a final decision would be taken on whether to restart some flights on 1 May.

Ryanair said Buzz's financial position was "extremely precarious", and that the airline was losing more than 1m euros (683,000) a week.

More soon.

Not helping


LONDON (AFX) - British Airways PLC has confirmed that it is considering the future of its Concorde fleet due to poor demand for the supersonic service.
"The retirement date of Concorde is under review, but no decision has been made at the moment as to when that will be," said a BA spokeswoman.

BA has struggled to attract Concorde customers since an Air France Concorde crashed in Paris killing 114 in 2000.

"In the current commercial environment where business and premium brands are under increased pressure it's only prudent for us to think carefully about when we should retire Concorde," said the spokeswoman.

She could not say when a decision would be made on the seven plane fleet, only five of which are in current service.

"There's a huge number of factors to consider," she added.

jdd/lam

26 Feb 2003 17:00 GMT

BA reviews Concorde's future in weak market

By Daniel Morrissey
LONDON, Feb 26 (Reuters) - The future of supersonic air travel between London and New York could be in doubt, with British Airways asking: Should Concorde be retired early?

The review by Europe's biggest airline comes at time when major airlines are under pressure from shrinking corporate travel budgets, depressing sales of business class tickets.

"We are looking at when Concorde should retire, although no decisions have been taken," said a British Airways spokesman. The carrier has five Concordes certified to fly until 2009.

Almost three years ago an Air France AIRF.PA Concorde crashed near Paris and killed 113 people, forcing both the British and French carriers to pay for costly modifications.

BNP Paribas analyst Nick van den Brul said it made sense for British Airways to retire Concorde early because the threat of impending war in Iraq was cutting business travel plans.

"The Concorde has never been that profitable anyway -- a marginal profit and it's just a flagship," said van den Brul. "It is quite true that all of the leading carriers are seeing the pre-war risk of substantial declines in business travel."

The Concorde has one daily London-to-New York flight.

"We will continue to fly it as long as it is safe, reliable and commercially viable," said the spokesman for British Airways. The airline has slashed thousands of jobs and reduced its capacity in response to the weak demand for air travel.

The king of the rich jetset for 30 years, Concorde has always been synonymous with superstars who quaff champagne and guzzle lobster while travelling at twice the speed of sound.

But the reality is much different.

Analysts estimate about 80 percent of Concorde's passengers were business travellers. Falling stock markets and a drought in merger and acquisition business has forced City of London and Wall Street banks to cut tens of thousands of jobs.

British Airways, which relies heavily on the transatlantic business travellers for high-margin revenues, warned this month it faced flat revenues in 2003 and a tougher year than 2002.

Well I gave up on BA (aka b*gger all) after a load of hassle and poor treatment after years of loyalty. I think they've lost it again.

I fly Virgin to the States all the time now. No airline is perfect, but they are not bad at all. And AmEx/Virgin will do you a deal on Upper Class fares. And the girls are charming.

GW

typical French ....


PARIS (Reuters) - An Air France supersonic Concorde airliner bound for New York has lost a piece of its rudder in flight, but still landed safely and on time at its destination, the airline says.
Air France said on Thursday a technical investigation was under way.

The incident comes a week after an Air France Concorde on the same route made an emergency landing in Canada after one of its engines malfunctioned.

Air France and British Airways -- the only airlines to operate the supersonic jets -- grounded their Concorde fleets after an Air France Concorde crashed on take-off from Paris on July 25, 2000, killing 113 people.

An investigation concluded a burst tyre had ruptured a fuel tank and flights resumed in November 2001 after modifications were made to avoid a repetition of the accident.

The Concorde entered service in 1976 and Air France and British Airways have 12 of the planes still flying in total.

To be fair to Air France, (although why I should escapes me) this fault has occurred at least twice that I can recall on BA Concordes.

More worrying is the cover up - it's hard to describe it as anything else - over the Air France Concorde crash.

It was blamed on debris on the runway from a departing Continental flight: to my knowledge, this played little or no part in the accident. A combination of other factors were responsible, including maintenance and technical crew error.

G

Looks like we will see them all grounded before much longer .....


ains


February 28, 2003

EasyJet 'reneged on deal with BA'
By Russell Hotten TIMES



A UNION representing pilots at Deutsche BA, the German subsidiary of British Airways, accused easyJet last night of reneging on an agreement to buy the operation.
The accusation will fuel suspicions that easyJet, Europes biggest budget airline, wants to walk away from a deal because of rising fears of a new recession in Germany.

It leaves BA in a difficult position because the airline has been desperate to sell its loss-making German division and may now be forced into a fire sale.

Georg Fongern, a spokesman for the Vereinigung Cockpit union, said pilots had verbally agreed to easyJets request for changes in working practices at Deutsche BA. Herr Fongern said: All of a sudden easyJet decided not to sign. They changed the terms of the agreement. It was not a surprise because we no longer think easyJet wants DBA.

EasyJet, which is paying BA 600,000 (410,000) a month to keep open an option to buy Deutsche BA, has not formally announced that the acquisition has been abandoned.

However, other sources who have spoken to easyJet executives say the company views a Deutsche BA acquisition as too risky given the worsening economic environment in Germany.

Ray Webster, chief executive of easyJet, has said that he wants to make a firm decision on Deutsche BA by the end of March, although the option to buy runs out in August.

No talks between easyJet, which has representatives on the Deutsche BA board, and the pilots union are planned. A spokesman for easyJet denied that a deal with the pilots had been agreed.

US landing fees set to soar JANES

We are hearing anecdotally that due to lower aircraft traffic volumes, some airports are actually considering increasing their landing fees and terminal rentals by as much as 30% to 40%," says Tom Browne, managing director, for the aviation infrastructure department at the Air Transport Association (ATA).

While only anecdotal evidence that is probably only applicable to a limited number of the hundreds of airports in the US, the fact that traffic is down and fee rises are under consideration still does not bode well for the industry.

With less aircraft in the air, airports still have to cover their fixed operating expenses incurred when running the terminal buildings, runways and related infrastructure. Added to this is the additional expense of improved security measures that the Transportation Security Administration (TSA) is responsible for in 450 of the nation's airports.

The problem with introducing the new TSA measures is that there is little, if any, funding available to pay for these new security systems and staff - despite its being a function of the federal government. Thankfully this may change.

But one problem that it may raise is what collateral can be used to borrow against for those airports that are already close to reaching their maximum debt level. Most of the improved security measures will be hi-tech equipment and employees as opposed to large brick and mortar infrastructure assets.

Agreeing the fee
Once airports have determined what to charge the airlines for landing fees over the course of the next six to 12 month period, the real negotiations begin. But the negotiating leverage of the airline will depend upon the airport that it uses.

An airline representing a significant portion of the flights using one airport terminal, with another hub nearby that is underused, will tend to have much more bargaining power than an airline that is one of many, using an airport with no nearby alternatives. And with time being of the essence, there is a mutual benefit for the two sides to ensure that all paths, however creative, are explored quickly.

There is still substantial excess capacity among the airlines with a significant proportion of the airline industry already in the midst of Chapter 11 proceedings. And with the looming threat of war with Iraq in the Middle East, another external shock is on the way that will further reduce air traffic levels.

It looks like any increase will just be passed onto the airlines that are likely to just add the landing fee increase to passengers' tickets.

Perhaps a more worrying issue for passengers is the proportion of a ticket that federal taxes and other fees already represent. According to ATA statistics, in 1972 it represented 7% of the ticket's total price. In 1992 more than double, at 15%. In 2002, a full 26% of the price. This is a significant portion of the ticket's cost.

It will be interesting to see what the airlines can get away with in this skittish period of air travel.

02/28 07:42
BAA Can Raise Airline Charges, U.K. Aviation Authority Says
By James Regan


London, Feb. 28 (Bloomberg) -- BAA Plc, the world's biggest airport operator, can raise airline fees by as much as two-thirds at its London airports to help fund an 11-year, 8.1 billion-pound ($13 billion) expansion, the U.K. Civil Aviation Authority said.

Heathrow airport charges would rise to 6.48 pounds per passenger in fiscal 2004 from 5.60 pounds in fiscal 2002, followed by an increase of retail price index plus 6.5 percent in each subsequent year. Gatwick fees would rise to 4.32 pounds in fiscal 2004 from 4.25 pounds in fiscal 2002, with London Stansted rising to 4.89 pounds from 4.39 pounds. Charges at both would rise in line with the retail price index in the following years.

``These price cap increases are necessary to enable BAA to deliver services to a growing market through a major investment program,'' the authority said in a Regulatory News Service statement.

Raising the amount BAA charges airlines for using its airports would help finance a 3.7 billion-pound fifth terminal at London Heathrow airport, which is due to open in 2008. BAA expects the number of passengers using its three London airports to increase 46 percent through 2013.

The new limits on BAA's airline fees will apply from April 1 for a five-year period.