BA upbeat on guidance and consolidation initiatives

London
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British Airways is optimistic that strong yields will enable it to post an operating profit for the full-year, and is pleased with the way things are going with its consolidation initiatives.

The carrier today reported a 75% drop in operating profit for the first half of the year and a net loss of £42 million ($66.3 million), compared to the £500 million net profit recorded a year earlier. But BA chief financial officer Keith Williams says the impact of increased yields "more than offset the volume decline" it had anticipated, and this will help the carrier to post an operating profit for the full-year.

"We've said for some time that remaining profitable at an operating level would be an achievement for the year, but our first-half results make us well-placed to achieve that goal," says Williams.

The carrier is also confident that discussions with Iberia over the proposed merger between the two carriers can now start to move forward, following the "slow progress" which chief executive Willie Walsh attributes to Iberia's lack of understanding of BA's pension scheme.

"Iberia doesn't have a defined benefit pension scheme so it's taken time for them to better understand those issues. But we've now got to a position where that's clear to them and we expect to start progressing other issues," says Walsh.

However, there is unlikely to be enough progress to enable anything to be publicly announced until next year.

Walsh says BA's application for antitrust immunity with American Airlines is "progressing pretty much as we'd expected", adding that "we remain confident we will get approval for our application in the first half of next year".

Continuing on his theme of optimism, Walsh says he does not expect Lufthansa's decision to take a majority shareholding in BA rival bmi to "radically change the competitive landscape at London Heathrow".

"What we have now is a competitor that has a new owner - not a new competitor," adds Walsh. "In the short-term, bmi will miss the guiding influence of Sir Michael Bishop but clearly Lufthansa will take steps to address that in due course. It's not clear at this point what Lufthansa intends to do with bmi. We will continue to watch with interest what happens."

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