Strengthened by huge fourth-quarter profit gains, a short-haul operation that is making money for the first time in a decade and rising load factors and yields, British Airways Friday reported a ?467 million ($880.7 million) profit for the financial year ended March 31, a 19.1% increase over year-ago net earnings of ?392 million.BA's fourth-quarter profit of ?83 million was nearly 14 times greater than the ?6 million earned in the year-ago period.

CEO Willie Walsh pronounced the results "good" but said, "we still have more to do" in the effort to reach a 10% margin by 2008, when BA is scheduled to move into London Heathrow's new Terminal 5. The 8.3% margin reached in FY06 triggered a ?48 million bonus to employees.

Annual operating profit increased 26.8% to ?705 million as turnover rose 9.6% to ?8.52 billion and expenses climbed 8.2% to ?7.81 billion. Walsh called "fuel and employee costs a challenge," the former rising 44.7% and the latter by 5%. He revealed that the accounting deficit in the New Airways Pension Scheme grew to ?2.07 billion "despite the company's increased contributions and equity markets at a five-year high." BA earlier proposed several changes to the program to be offset by a ?500 million payment (ATWOnline, March 24).

Full-year traffic lifted 3.7% to 111.86 billion RPKs against a 2.6% increase in capacity to 147.93 billion ASKs, nudging load factor up 0.8 point to 75.6%. Yield rose 1.3% to 6.1 pence. BA reported improved unit performance as passenger RASK climbed 2.2% to 4.61 pence and cost per ATK grew just 0.5% to 28.62 pence.

Fourth-quarter operating profit more than doubled to ?93 million from ?46 million in the year-ago period. Revenues rose 13.2% to ?2.12 billion and expenses increased 10.9% to ?2.03 billion. The bottom line was enhanced further by ?27 million in profit on the sale of fixed assets and amendments, nearly all of which came from BA's sale of its stake in London Eye Co. (ATWOnline, Nov. 11, 2005).

Chairman Martin Broughton said that "market conditions remain broadly unchanged" and the company expects a 5%-6% rise in revenue in the current fiscal year, a slight lift from prior forecasts prompted by the airline's decision to raise fuel surcharges plus improvements in load factor.

"Our business plan will focus on preparing for the move to Terminal 5 in 2008, investing in products for our customers and driving to a competitive cost base to make our company fit for growth in the future," BA said.