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".

Down nearly 6% on the lack of forward visibility that the media is focussing on .... volumes are high against the daily average of around 8 million but not exceptionally so under the circumstances @ 3 million.



ains

LONDON (AFX) - Rod Eddington, chief executive of British Airways PLC, said he is confident the flag carrier can exceed its target of 650 mln stg of annualised costs savings by March 31, 2004.
"I'm confident we'll exceed the 650 mln stg," he told reporters after BA released its year to March 31, 2003 results.

"Our first challenge is to get to 650 mln stg and we'll focus on moving beyond it when we reach it," he said.

Earlier BA revealed it had achieved annualised cost savings under its 'Future Size and Shape' (FSAS) restructuring programme of 570 mln stg by March 31, 2003 -- ahead of its year one target of 450 mln stg.

The airline exceeded savings targets in all areas including manpower costs, distribution, procurement and information technology.

Manpower reductions since August 2001 total 10,182 against an FSAS year one target of 10,000, and are on track to achieve the FSAS year two target of 13,000 by September this year.

In addition to the FSAS programme, BA plans to cut costs by a further 450 mln stg by March 2005 -- 300 mln stg by reducing external spend by 10 pct and 150 mln stg from other initiatives.

BA reported a year to March 31, 2003 pretax profit of 135 mln stg versus a loss of 200 mln stg last time and ahead of analysts' expectations of a pretax profit of 17-108 mln stg.

The full year outcome masked a difficult fourth quarter, during which BA notched-up a pretax loss of 200 mln stg versus an 85 mln stg loss the last time.

However, the fourth quarter performance was still better than analysts' expectations of a pretax loss of 318-227 mln stg.

BA said it expected the business environment to remain challenging in 2003/04, given the backdrop of continuing global economic weakness, SARS, and Middle East developments.

It warned that revenue in quarter one will be lower than last year and said visibility beyond the first quarter is unclear.

"We've said that we anticipate it (first quarter revenue) will be lower. We're not going to put a number on that," Eddington told reporters.

"It's really difficult to get visibility looking ahead. Not just six months ahead but one month ahead, and in that environment we don't want to be putting any percentages on our broad comment of lower revenue."

At 8.47 am shares in BA were down 1-3/4 pence at 141-1/2.

james.davey@afxnews.com

Durlatcher takes an each trading stance this morning - looking for 148p on good newsfor move northwards but indicates a sell if closing below 136p


ains

LONDON (AFX) - Rod Eddington, chief executive of British Airways PLC, today insisted the flag carrier will not reverse its decision to retire Concorde despite Sir Richard Branson's campaign to save the supersonic airliner.
Last month BA and Air France announced they will ground their Concorde fleets in October and May respectively, prompting Branson's rescue attempt.

BA said its decision had been made for commercial reasons with passenger revenue falling against a backdrop of rising maintenance costs for the aircraft.

It explained that extensive talks with Concorde's manufacturer Airbus -- the European planemaker owned by European Aeronautic Defence and Space Co and BAE Systems PLC -- had confirmed the need for an enhanced maintenance programme in the coming years that BA could not justify.

"BA has been working with Airbus and its predecessors (Aerospatiale and British Aircraft Corporation) on Concorde for over 30 years and clearly the decision to retire Concorde was one that was only taken after a substantial amount of work was done between the technical teams at BA and Airbus," Eddington told reporters today after BA released its year to March 31 2003 results.

"The chief executive of Airbus and his senior directors have made it very clear to me personally that Concorde's time has come sadly and it's time she retired.

"Our experts and their experts have both come to the same conclusion it couldn't be clearer."

However, Branson looks set to continue the fight.

A spokeswoman for Branson's Virgin Atlantic said he will meet Airbus executives on Wednesday to put forward his case for saving Concorde.

Although his pleas to both Prime Minister Tony Blair and Trade and Industry Secretary Patricia Hewitt to intervene have been unsuccessful, he claims to have the backing of the British public.

Meanwhile, Eddington revealed that Concorde bookings have been "very good" since her impending retirement was announced April 10.

"A lot of people have had it as something they might want to do at some point in the future and they recognise they do have six months to do it," he said.

james.davey@afxnews.com

Will be looking for an entry point to add a few but media is tending to be neggative at this time

ains



Despite a previous tough 12 months and the 'triple whammy' of the war in Iraq, Sars and a weaker global economy, the 1.5 billion airline (BAY) reported a pre-tax profit of 135 million for the year to March, ahead of its 200 million loss the year before.

Turnover fell 8% to 7.7 billion, reflecting the withdrawal from unprofitable routes and 570 million of cost cutting, which is running ahead of forecasts. Revenue passenger kilometres (RPKs) fell 6%.

Operating cashflow rose by more than a third to 1.2 billion, while net debts were reduced by 1.1 billion to 5.1 billion. There is no dividend.

However, the rosier picture for the full year masks a tougher fourth quarter, which included the worst side effects of the war in Iraq.

The fourth quarter pre-tax loss was 200 million, compared with an 85m million loss a year ago, and a 7% fall in RPKs. Turnover fell 14.2% to 1.6 billion.

'It felt inside the business as though we were at war already, before 20 March,' said Eddington. 'A lot of premium business fell away and fuel prices rose.

'There are many pressures in the marketplace and the revenue environment is challenging.'

Certainly, the many pressures on the airline industry these days have hit some parts of BA hard, particularly its all-important premium traffic, which fell by a quarter in March and April.

Non-premium traffic, in contrast, appears to have recovered somewhat, although Eddington claims Sars is 'still an issue', as are the latest terrorist attacks.

Revenue for the first quarter of the current year will be lower than last year, he said, while there is little visibility beyond that.

Meanwhile, the group is to take an 84 million write-down and impairment charge on Concorde, which is to be grounded at the end of October.

BA's shares are down 5.25p at 138p.

Citywire Verdict:

A 30% reduction in the fleet and more than 10,000 redundancies so far have helped steady BA in the seemingly-endless turbulence in which the airline industry is flying these days.

And as Eddington predicts, further redundancies and the offer of unpaid leave for all staff mean the group looks on course to beat its previous cost-cutting targets of 650 million by March 2004, with an additional 450 million to come by March 2005.

BA's shares have nose-dived from nearly 250p a year ago to as little as 85p two months ago, to reflect the well-known woes of the airline industry. However, the rally in global stockmarkets has seen the shares almost double from their March low.

BA has been doing the right things and will emerge from its cost-cutting drive a leaner, meaner, flying machine. But its shares are not cheap and, given the continued wariness of air travellers, are risky even for the long term.

2003 Citywire

Telegraph tips them for adventureous investors


Rod's cost cuts helping BA climb into brighter skies

Since Rod Eddington took the controls at British Airways in May 2000, he's had foot and mouth, September 11, a nosediving economy, the Iraq war and now Sars to contend with. He's had rotten luck, but has made the best of it, pushing through changes at BA that were long overdue.



By September, 13,000 jobs will have gone without a fight with the unions. Engineering, catering and airport costs keep coming down and the short-haul European network is being reorganised, with losses more than halved last year to 117m. Mr Eddington is confident of cutting more than the target 650m of annual costs by next March.

There's much more focus on cash too. Net debt is still too high at 5.15 billion, but BA did well to cut it by 1.15 billion last year. Capex has also rattled down, from 906m to 319m last year. In short, BA is in much better financial shape should Mr Eddington's luck ever change, even if fuel and pension costs are rising.

The airline still looks too much like an option on the US economy, dependent on the resumption of its highly profitable bankers' shuttle across the Atlantic. Yet, with each percentage point on fares per seat translating into about 60m profit, the slightest upturn will give BA a massive lift.

There's no sign of it yet and BA is not helped by the billion-dollar bungs that the Bush administration is giving to US airlines, which Mr Eddington is rightly cross about. But one day it will come. Merrill Lynch, joint house broker, expects 43m profit this year, rising to 215m next, though it is more bullish than some analysts. With the shares down 5.75 yesterday to 137.5p, that equates to a multiple of 39 times, falling to 10 times.

Forecasting is notoriously difficult and, with no dividend, the shares are very risky. Still, BA is a highly cyclical stock and could reward a small punt.

Citigroup's Smith Barney retained its 'outperform, speculative' rating on BA and 170 pence target price. "As expected, the outlook is poor for the entire industry, but BA's aggressive cost cutting ranks it ahead of competitors," the broker said in a note to clients. "We continue to believe that BA is the best play among the flag carriers on a return to more normal political, economic and medical (SARS) conditions."

Merrill Lynch repeated its 'buy' stance. In a note to clients the broker said the results are more likely to provide encouragement for the short-term bulls than the bears. It said anticipated downgrades (versus pre-war estimates) for the full year may be less than feared, pointing out the results contain no new layer of bad news.

Meanwhile, Cazenove and Williams de Broe also repeated 'buy' recommendations.

Weird but CSFB have raised their target from 60p to 100p (currently 127) with EBIT raised from 121 to 170 million but they remain at underperform .... hmmmmm



ains

Here comes the 100p again.

yes have shorted these well up on these i can see 80p poss on if it breaks the 1 mark

BA considers bid for Virgin Atlantic
By Edward Simpkins and Mary Fagan (Filed: 25/05/2003)


Rod Eddington, the chief executive of British Airways, has called a meeting this week of senior executives to consider a bid for Virgin Atlantic, the airline headed by Richard Branson.

Executives at BA say that any deal is likely to be some weeks away, but that the industry is ripe for consolidation and that BA's reduced debt, which now stands at 5bn, puts it in pole position to acquire weaker rivals.

Roger Maynard, BA's head of alliances and franchises who is also responsible for strategy, has been recalled from a trip to Australia to attend the meeting, after it emerged last week that Virgin has been in merger talks with BMI, the Midlands-based European carrier.

"Maynard and Eddington are going to sit down to decide what this means for BA," a BA official said last night. "BA is always in the business for slots at Heathrow, and of the two carriers Virgin Atlantic is the much more attractive for us."

However, any deal between BA and Virgin would be sure to run into regulatory difficulties, both from domestic and European competition authorities and from US regulators.

It has emerged that in January this year Virgin, in co-operation with Texas Pacific Group, the US private equity firm, looked at whether it should bid for British Airways.

However, Virgin, which was advised by Credit Suisse First Boston, decided that it would prefer to look at some form of co-operation or merger with BMI.

Will Whitehorn, a spokesman for Virgin Atlantic, said: "We came very close. We were very serious about BA, but we decided with our advisers that BMI was more interesting. We have no for sale sign up, we have an expansion sign up."

ainsoph

One for you, check my notepad thread, you will be pleased of the news on there.

IT

ains has been banned

Back in May this year the price was at or below 100p - been doing well
recently despite retiring Concorde, recent passenger figures not bad,
good times coming back for BAY? Looks promising....
Now all we need is the dividend re-instated please!