=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2003/02/10/f= inancial0929EST0024.DTL ---------------------------------------------------------------------- Monday, February 10, 2003 (AP) BA posts quarterly profit but sees cloudy outlook for the year BRUCE STANLEY, AP Business Writer (02-10) 06:29 PST LONDON (AP) -- British Airways PLC earned 13 million pounds ($21.2 million) in its third quarter, rebounding from a loss a year ago thanks largely to deep cuts in costs. However, Europe's biggest airline said Monday that it could show a loss for the current fiscal year if war erupts. The threat of war, toughening competition, and a cloudy economic outlook make BA anticipate that sales will stagnate over the next 12 months, said chairman Lord Colin Marshall. "In the absence of hostilities in the Middle East, we expect this financial year to be profitable," he said. "We expect the business environment to be tougher in 2003 than last year." BA's shares fell by 2.3 percent to 114 pence ($1.86) in afternoon tradin= g. The airline's profit for the three months ending Dec. 31 contrasted with last year's loss of 144 million pounds. Quarterly sales rose by 1 percent to 1.86 billion pounds ($3.03 billion) from 1.84 billion pounds a year earlier. For the first nine months of the year, BA earned 205 million pounds ($334 million) compared to a loss of 99 million pounds a year earlier. Sales fell 6 percent to 6.01 billion pounds ($9.80 billion) from 6.39 billion pounds a year earlier. Total costs for the last 12 months were 1 billion pounds ($1.63 billion) lower than in the previous year, said chief executive Rod Eddington. The airline reduced its expenses for fuel, labor, airport use and maintenance by 9.4 percent. BA's cost-cutting efforts progressed faster than expected during the quarter, and its so-called Future Size & Shape restructuring program is running ahead of plan, Eddington said. The company's cash holdings of 1.76 billion pounds ($2.87 billion) -- up from 1.22 billion pounds a year ago -- would help it weather any downturn in business caused by a war in the Middle East, he added. BA lost about 2 million pounds ($3.3 million) a day in the immediate aftermath of the September 2001 terror attacks. Its low cash reserves and large debts led to questions at the time about its ability to survive. BA's yields, or the revenue it generates per mile flown by its passenger= s, fell 4.5 percent in the quarter. Cargo yields dropped by an even bigger 5 percent. Eddington said it was too difficult to predict whether yields would improve in 2003 until it becomes clear if U.S.-led forces are going to war against Iraq. =20 ---------------------------------------------------------------------- Copyright 2003 AP