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BA jets back into profit
February 5, 2001: 7:38 a.m. ET

Increased business traffic helps British Airways return to the black
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LONDON (CNN) - British Airways, Europe's biggest airline, said on Monday it returned to profit as it replaced economy travellers with business passengers.

Operating profit for the three months to December 31 rose to £80 million ($117.5 million) from a loss of £2 million in the same quarter a year ago. Analysts had predicted a profit in the region of £54 million.

graphicNet income soared to £58 million, or 5.3 pence a share, from a loss of £71 million, or 6.6p a share, in the year earlier period. Revenue rose 4.4 percent to £2.3 billion.

British Airways' strategy is to carry more passengers in business class and reduce the number of economy passengers. The company introduced flying beds in business class to woo customers back from other airlines on it's most important route from London to the United States.

Despite the huge swing in profitability, the number of people flying with BA in the period fell 0.3 percent to 8.51 million.

"Smaller aircraft, higher frequencies and a higher mix of premium passengers all characterize the current strategy and contributed to the improvement," the company said.

BA's premium traffic rose 2.4 percent in the third-quarter, non-premium traffic declined 1.8 percent and yield, or revenue per passenger, climbed 8.3 percent, its fifth successive quarterly gain.

The company said its strategy to slash capacity, through the replacement of its 400-seat Boeing 747s for smaller planes, and fly more frequently, would help it weather any growth slowdown in the U.S. economy.

"We're well-placed to cope with a softening of the U.S. economy," Chief Executive Rod Eddington said. "We're looking to put fewer seats on the North Atlantic over the next twelve months."

BA said talks to sell its low-cost airline, Go, were at an advanced stage. The sale of Go is part of the company's strategy to cut losses on short-haul routes and restore profit at its European operations. BA plans to move its long-haul flights from Gatwick, south of London, to its base at Heathrow, west London. The move will cut capacity by about 9 percent.

Concorde to fly again by end 2001

Eddington told reporters BA is in talks with Swissair about joining the Oneworld alliance, led by the carrier and partner American Airlines (AMR: Research, Estimates). Oneworld also includes Spain's Iberia, Finnair, Aer Lingus, Qantas, Cathay Pacific and Lan Chile. American has made it clear it would like Swissair to join the alliance.

graphicBA also said it plans to spend £30 million pounds on improving Concorde over the next 12-months. Eddington said the company expects Concorde to be back in the air by the end of the year, after it was grounded in July when an Air France Concorde crashed outside Paris, killing everybody on board.

Shares in British Airways (BAY) fell 24.5 pence, or 5.3 percent, to 433 pence in midday trade. The stock has soared about 15 percent since the start of the year. Last year the stock came close to being flung out of the benchmark FTSE 100 index due to its falling capitalisation.

"This is clearly a pretty good performance in what's a seasonally quiet period," Tim Rees, director of UK equities at Clerical Medical, which owns 3.4 percent of BA's shares, told Reuters. "The fact that shares are down is simply a reflection of the previous good run the stock has had." graphic