A cost-cutting drive helped British Airways top forecasts for annual profit today but it warned first-quarter revenues would be weaker than a year ago in a tough aviation market.
Shares in Europe's biggest airline dropped 6 per cent on the revenue warning and worries about the impact on demand for air travel from terror alerts around the world and the wave of suicide bombings in the Gulf, Morocco and the Middle East.
The airline, which has cut more than 10,000 jobs and reduced capacity, swung back into the black with pre-tax profit of £135 million sterling for the year to March 31st, compared with a £200 million loss last year.
Revenues fell 7.8 per cent to £7.688 billion. The full-service carriers have been hit hard by the Iraq war, sluggish economies, SARS, corporate travel budget cutbacks and competition within Europe from the booming no-frills airlines.
BA said its cost-cutting programme, dubbed "future size and shape", was exceeding targets in all areas including labour costs, distribution, procurement and information technology.
But on the revenue front, BA said visibility beyond the first quarter is not clear.