British Airways has put aside ”350m ($690m) to cover possible fines and legal action after it appears to have broken competition law concerning fuel charges.
Commercial director, Martin George, and communications chief, Iain Burns, have been blamed for the action and are no longer with the airline. Referring to the action on BBC TV, chief executive, Willie Walsh, said: "I find that very regrettable and completely unacceptable."
BA, in its annual report, also announced that annual operating profits had slumped 13% to ”602m after a spate of negative events. Mr Walsh described these results as " strong" in what had been "a challenging year". Sales in fact rose 3.4% to ”8.49bn in the year to 31 March. City opinion seems to be positive with the figures better than expected, while both yield and capacity were slightly up.
Martin Broughton, British Airways chairman, said: ”We are pleased with the progress that Willie and his team have made on many fronts this year despite all the challenges. In terms of current performance, we have seen some weakness in non-premium segments notably on the North Atlantic. To some degree, complete visibility is hampered by the ongoing baggage restrictions which impact all cabins.”
Broughton was highlighting the UK only rule which restricts passengers to one piece of hand baggage outbound on flights, including connections from overseas. Typically BA customers inbound from New York, and even from Gibraltar can carry two pieces but will have to make arrangements to discard one item if joining another flight at Heathrow.
In a forward planning move BA confirmed an order for a further eight Airbus A320 for the short haul fleet and said that it would phase out its elderly Boeing 737 aircraft, eventually finishing up with around 80 A320 series aircraft. An commitment for 34 aircraft both for replacement and expansion, was confirmed for the coming months. It is expected that the majority of orders will go to Boeing.
With most of the pension problems behind it, and a year free of industrial problems, 2006/2007 results were positive, although no dividends will be paid.