This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx /-------------------- advertisement -----------------------\ Explore more of Starbucks at Starbucks.com. http://www.starbucks.com/default.asp?ci=1015 \----------------------------------------------------------/ British Airways Posts Profit but Is Wary About Outlook May 20, 2003 By REUTERS LONDON, May 19 - British Airways topped market forecasts for annual profit today, but the airline, Europe's biggest, warned that first-quarter revenue would be weaker than a year ago. The shares fell 4 percent on the revenue warning and on worries about the impact of terror alerts around the world and suicide bombings in the Persian Gulf, Morocco and the Middle East. "We're still flying into a stiff headwind," the chief executive, Rod Eddington, said. The SARS virus is also an issue, particularly for flights serving Beijing and Hong Kong, Mr. Eddington said. The airline, which has cut more than 10,000 jobs and reduced its capacity, posted a pretax profit of £135 million ($220 million) for the year that ended March 31, in contrast to a loss of £200 million ($326 million) a year earlier. Revenue fell 7.8 percent, to £7.7 billion ($12.5 billion). Airlines have been hit by the war in Iraq, slow economies, SARS, cutbacks in corporate travel budgets and competition within Europe from no-frills airlines. A Morgan Stanley analyst, Martin Borghetto, said British Air was managing its cost base well despite the difficult external conditions. "The network carriers can't give at the moment an objective outlook and, therefore, continue to paint a rather cautious picture," Mr. Borghetto said. "But I think over all where the company can manage things is on the cost side and that is where the company has done well." Total overall costs for the year declined 11.9 percent, while net debt was reduced by £1.15 billion ($1.9 billion) to £5.15 billion ($8.4 billion), the lowest since 1998, the airline said. "B.A. still has too much debt," a Merrill Lynch analyst, Anthony Bor, said in a report. British Air said its cost-cutting program was exceeding targets in all areas including labor costs, distribution, procurement and information technology. Mr. Eddington said he was confident that British Air would exceed its annual cost-savings target of £650 million ($1.1 billion) by the end of March 2004. British Air already extracted £570 million ($930 million) in costs, beating its March 2003 target by £120 million ($195 million). The chairman of British Air, Lord Marshall, said the revenue outlook beyond the first quarter was not clear. Shares of British Airways fell 5.75 pence, to 137.5 pence, on the London Stock Exchange. http://www.nytimes.com/2003/05/20/business/worldbusiness/20BRIT.html?ex=1054437775&ei=1&en=b745017f250323af --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! Click here: http://www.nytimes.com/ads/nytcirc/index.html HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2003 The New York Times Company