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Aviation History
1971
1971 - 1694.PDF
350 FLIGHT International, 2 September (971 AIR TRANSPORT... A group profit of £524,000 was reported by BEA last week for the financial year 1970-71. The figure takes into account payment of £8 million interest, and receipt of £8 million from the Government's special account. Adjustment of amortisation periods on the Trident fleet reduced the total depreciation by some £1 million. Return on net assets was 5 per cent. There was an operating loss of £780,000. Capacity sold was less than in 1969-70; passenger traffic rose marginally, but cargo slumped. BEA's profit down in "difficult year" THE ANNUAL REPORT of BEA for 1970-71, published last week, shows that the airline made a group profit of £524,000, compared with £6 • 5 million the previous year. "Although this result was disappointing," says the report, "it was achieved during an extremely difficult year for industry in general and civil aviation in particular. Economic growth in the United Kingdom continued at a depressed level, the gross domestic product increasing in real terms by only 1-5 per cent and consumer spending by just under 3 per cent." In view of general conditions, said Mr Henry Marking, BEA's chairman, last week, the airline took "a modest pride" in its achievement. The profit figure was arrived at after taking into account the payment of £7-9 million in interest. Had BEA had the same type of capital structure as BOAC, Mr Marking stressed, the 1970-71 profit would have been £5-75 million. BOAC has public dividend capital, a system under which the dividend on the Government's investment in the air line is calculated at the close of the year, in a way rather similar to private-enterprise practice; BEA on the other hand has to meet a fixed interest rate irrespective of the year's result. "I would imagine that the system will change," said Mr Marking. "It would be illogical for BOAC and us to go into the British Airways Board with different capital structures." BAB is due to be formed early next year to take over control of the two corporations. A credit added into BEA's profit-and-loss account in 1970-71 was the sum of £8 million from the special account. This was the account set up by the then Board of Trade under the Air Corporations Act, 1969, as a means of com pensating BEA for the Government's refusal to let the airline buy the aircraft which its commercial judgement dictated it should buy—in other words a Boeing 727/737 fleet. The account totalled £25 million, of which £17 mil lion has now been paid; the last instalment of £8 million will be paid during the current financial year. Another factor in favour of BEA's result was a change in depreciation policy during the year. The book lives of the Trident Is and 2s have been extended from 12 years to 14 years, which has had the effect of reducing amortisa tion costs by about £1 million. Mr Marking stressed that this book-keeping transaction was in accordance with the airline's policy of ensuring that book life of its aircraft reflects the true operational life of the type concerned. He added that BEA's record of residual book value against actual disposal value of its aircraft over the years had been a good one. Three subsidiaries—BEA Airtours, BEA Helicopters and British Air Services—helped BEA's group results in the year. They were all profitable—BEA Helicopters for the first time, with a net profit after interest of £224,000 (the figure included surpluses on disposal of assets; operating profit was £142,000). BAS profit was £197,000 (see Flight for August 5, page 196); BEA Airtours' profit was £154,000. Operationally BEA slipped into the red in 1970-71. With revenue up by almost 6 per cent but expenditure up by more than 16 per cent, the 1969-70 operating profit of £11 million became a loss of £778,000. Passenger traffic (in passenger-miles) was more or less static (see the table on this page) while freight ton-miles were down 12-5 per cent. The total number of load ton-miles sold was 1-7 per cent down on the previous year. As Mr Marking pointed out, the freight traffic had suffered from serious teething troubles (now cured) in the new BEA cargo terminal at Heathrow, and had been further depressed by general economic conditions through out Europe. Load factors, particularly the weight load factor (reflecting the cargo situation) slipped appreciably. Other adverse factors listed by Mr Marking included the British postal strike (loss of £400,000 revenue); security costs (about £750,000); and a three-day strike (£750,000). This year, said Mr Marking, it would be difficult to break even, especially after payment of interest amount ing to £10 million. There would be continued economy drives, although the number of ways in which costs could be reduced was becoming limited. Passenger traffic was now increasing by about 7 per cent per year, although cargo remained static. By 1972-73 the airline's position should be much stronger. "I'm bullish; we're in one of the great expanding industries of the world," said Mr Marking. Becovery might begin in 1972, but if not it would certainly take effect in the longer term. The airline's regularity performance, he said, was now much improved. "BEA is now the most punctual airline in Europe—and by a considerable margin." Development of scheduled services and keen competition in all markets was the keynote of the airline's philosophy. BEA STATISTICAL SUMMARY 1970-71* Financial (£ < 1,000): Revenue Expenditure Operating profit (loss) Group profit attributable to BEA 1970-71 133,350 134,128 (778) 524 1969-70 126,038 115,018 11,020 6,532 Variation (%) + 5-8 + 16-6 — — Traffic: Capacity ton-miles offered (millions) 6990 661-3 Load ton-miles sold (millions) 378-6 3850 Overall load factor (%) 54-2 58-2 Load factor to cover total expenditure (%) 57-6 55-9 Cost per CTM (p) 20-3 18-3 Revenue per CTM (p) 19-1 190 Revenue per LTM (p) 35-2 32-7 Passengers carried 8,665,824 8,475,856 Passenger-miles (millions) 3274-5 3259-8 Available seat-miles (millions) 54250 5229-1 Passenger load factor (%) 60-4 62-3 Tons of mail 16,683 16,436 Mail ton-miles (millions) 7-1 7-2 Tons of freight 110,605 130,758 Freight ton-miles (millions) 45-9 52-4 + 5-7 - 1-7 - 40pt + 1-7pt + 10-9 + 0-5 + 7-6 + 2-2 + 0-5 + 3-7 - 1-9pt + 1-5 - 1-8 -15-4 -12-5 Operations: Regularity (passenger services) (%) 95-4 Punctuality on arrival (passenger services) (%) 68-0 Revenue hours flown 225,832 Aircraft utilisation—revenue hours per annum 2,169 Cost per revenue flying hour (£) 627-5 Revenue per revenue flying hour (£) 590-5 Revenue aircraft miles flown (millions) 63-9 Cost per revenue aircraft mile flown (p) 221 -7 Revenue per revenue aircraft mile flown (p) 208-6 96-9 72-8 216,250 2,065 559-6 582-8 60-7 199-5 207-5 - 1-5pt - 4-8pt + 4-4 + 5-0 + 12-1 + 1-3 + 5-3 +11 -1 + 0-5 Staff and productivity: Average number of employees CTM per employee Revenue per employee (£) 24,868 28,110 5,362 23,228 28,471 5,426 + 7-1 - 1-3 - 1-2 * Year ended March 31.
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