BA cost-cutting generates third-quarter operating profit

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British Airways has posted an operating profit of £25 million ($39 million) for the third quarter, against a loss in the previous equivalent period of £51 million.

It expects the trading improvement in the third quarter to continue in the fourth, as long as the airline avoids a possible strike by cabin crew, but the carrier warns that it is still forecasting record losses for the full year.

"Our focus on permanent cost reduction must continue if we are to return the business to profitability in the short term," says BA.

Third-quarter revenues - covering the first half of the winter season - were down by 12.9%.

But BA says that its premium traffic volume, while down by 9.7%, is still at a "significantly better" level than that contained in IATA industry statistics.

BA's long-haul premium performance is showing "modest" improvement, which the airline attributes to optimism over economic recovery.

It cautions, however, that non-premium revenue will "require a return to economic growth to deliver historic performance levels".

Over the first nine months of its 2009-10 financial year, BA turned in an operating loss of £86 million, against an operating profit of £89 million in 2008-09.

Operating costs were down by 10.5% over the period, aided by a 19% drop in fuel expenditure. BA's operating costs also included a £62 million restructuring charge.

"While we are on the right track, we still expect to make record losses this year," says chief executive Willie Walsh. "Permanent structural change is being introduced in all areas and will return us to sustained profitability."

BA says it has achieved £300 million in cost savings across the airline in the year to December.