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Informe y Cuentas Anuales de British Airways (solo disponible en inglés)
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In accordance with the UK Listing Authority Rules, the following documents have been submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM and on the website www.iagshares.com:

  • British Airways Plc Annual Report and Accounts for the year ending 31 December 2014

 

In addition, the information below, some of which is extracted from the Annual Report and Accounts 2014, is included solely for the purpose of complying with the Disclosure and Transparency Rule 6.3.5 (“DTR 6.3.5”), which requires certain material to be communicated to the media in unedited full text through a Regulatory Information Service. This material is not a substitute for reading the full Annual Report and Accounts 2014.

 

Andrew Fleming
Company Secretary
19 March 2015


BRITISH AIRWAYS RESULTS

1 January 2014 – 31 December 2014

All of the information below was contained within the Results Announcement issued by International Consolidated Airlines Group S.A. (‘IAG’) on 27 February 2015.

British Airways Plc (‘BA’ or ‘the Group’) is the UK’s largest international scheduled airline and one of the world’s leading global premium airlines. The Group’s principal place of business is London with significant presence at Heathrow, Gatwick and London City airports. Operating one of the most extensive international scheduled airline networks, together with its joint business agreements, code share and franchise partners, BA flies to more than 400 destinations worldwide. BA’s vision is to be the most admired airline.

Period highlights

  • Revenue up 2.6 per cent to £11,719 million.
  • Operating profit before exceptional items £975 million (2013: £651 million).
  • Operating profit of £975 million (2013: £708 million).
  • Profit before tax from continuing operations £859 million (2013: £300 million).
  • Non fuel unit costs per ASK down 1.1 per cent compared to 2013 on a constant currency basis.

Management review
BA has made an operating profit of £975 million in 2014 (2013: £708 million), which is a significant achievement, building upon the solid foundations set in 2013. Following the arrival of our first Airbus A380s and Boeing 787s in 2013, this year BA introduced further aircraft and now has eight A380s and eight 787s. We have focused on investing in our product where it matters most to our customers, on making journeys more comfortable and enhancing the network we offer, including providing the opportunity to book flights with Vueling and US Airways, which has opened up more than 200 new destinations.

We have continued to use technology to innovate and enhance customer loyalty, including introducing digital membership cards for British Airways Executive Club members, and updating the BA app, allowing customers using Heathrow Terminal 5 and Terminal 3 to receive ‘push notifications’ on smartphones informing them of their gate number, when it is open and when their aircraft is boarding.

Looking ahead, we are introducing new routes to destinations in Spain, Greece, Egypt, Malaysia and elsewhere.

Outlook
Despite generating an operating profit of £975 million in 2014 (2013: £708 million), BA will continue to ensure that it is financially robust and is able to respond quickly to the ever-changing environment of the industry. Management is committed to delivering significant structural change to the cost base. BA continues to take delivery of new generation wide-bodied aircraft and the advanced technology of this new fleet is set to unlock significant fuel savings, whilst also contributing to BA’s continued efforts to minimise its environmental impact.

BA will continue to focus on customer satisfaction and improved operational performance, focusing on investments which matter most to the customer and on the use of technology to improve the customer journey. We have continued to invest in technology, which is a key element to revenue growth. This allows BA to better understand the needs of our customers and better target marketing campaigns where they will have the greatest penetration.

More emphasis will be placed on improving revenue and profit contributions from the short-haul business to ensure it delivers a sustainable return on its own merit. Improvements include seat densification, a new interior, and active management of the short-haul network.

The AJB now incorporates the merged American Airlines and US Airways, adding 27 new transatlantic routes and nine new European destinations to the AJB’s network. Where appropriate, BA will continue to seek to deepen other partnerships through the extension of codeshare relationships and the development of joint businesses and continues to be committed to the future development of the oneworld alliance, which welcomed TAM Airlines in 2014.


Financial review
Revenue for the year was £11,719 million, up 2.6 per cent over the previous year. This included an increase in passenger revenue of £323 million or 3.2 per cent given strong improvements in volumes.

Available capacity (ASKs) increased by 5.9 per cent as a result of the addition of new aircraft which resulted in an increase in passengers carried to 42 million from 40 million in previous years. A strong commercial performance has meant that this additional capacity has mostly been filled with traffic as RPKs have increased by 5.4 per cent although load factor has only marginally decreased by 0.3 percentage points.

Passenger revenue per RPK ended the year 2.1 per cent lower than last year mainly as a result of adverse impact on foreign exchange.

Fuel costs decreased year-on-year by £240 million to £3,515 million compared to £3,755 million in the prior year. The decrease is mainly attributed to a reduction in the average fuel price, net of the impact of hedging, and the favourable impact of foreign exchange offset by the increase in volume.

Group expenditure excluding fuel has increased by £214 million to £7,229 million, or a 3.1 per cent increase. Given that ASKs increased by 5.9 per cent, this represents a 2.7 per cent decrease in non-fuel costs per ASK driven mainly by cost saving initiatives around the business. Part of this decrease is also due to the favourable impact of foreign currency exchange rates, at a constant exchange rate non-fuel costs per ASK decreased by 1.1 per cent compared to the prior year.

Consistent with the increasing revenue trend mainly driven by volume, other operating costs have also increased. Depreciation, amortisation and impairment have increased due to the increase in depreciation from new aircraft deliveries and impact of changes to the depreciation policy on certain fleet. Handling charges, catering and other operating cost have also increased due to increased volume and incremental growth from BA Holidays. These were offset by reductions in engineering and other aircraft costs mainly driven by the cancellation of the long haul freighter service.

In total, non-operating items are an expense of £116 million in the current year (2013: £408 million) a decrease of £292 million. The three principal changes in non-operating income and costs were a favourable share in profit of associates of £39 million (2013: £65 million loss) and the non-recurring impact of the revaluation of the convertible bond liability in 2013 giving rise to a £164 million charge offset by the adverse impact of the fuel derivative losses of £37 million (2013: gain of £17 million).

Profit before tax for the year was £859 million (2013: £300 million).

The tax charge on continuing operations for the year ended 31 December 2014 was £157 million (2013: £16 million). The UK cash tax charge for the year was reduced by the utilisation of the remaining £80 million of Advanced Corporation Tax (ACT) paid on dividends in previous years. The Group profit before tax was £859 million but is stated after a gain of £39 million from the post-tax share of associates for which no corporation tax is reflected in the financial statements. After adjusting for this and movements relating to prior years, the Group’s effective tax rate was 20.8 per cent, compared to the UK corporation tax rate of 21.5 per cent

During the year, the net deferred tax liability has decreased by £222 million to £222 million, primarily as a result of an increase in deferred tax assets related to the pension liabilities, given significant actuarial losses recognised in the year, and the significant mark-to-market losses on hedging instruments driven by the sharp decline in fuel price.

Profit for the year was £702 million (2013: £281 million).


Capital expenditure
Total capital expenditure in the year, amounted to £1,494 million (2013: £1,378 million). This comprised: £1,296 million in fleet-related spend (aircraft, aircraft progress payments, spares, modifications and refurbishments) and £198 million on property, equipment, software, and landing rights.

During the year the Group took delivery of three Airbus A320 aircraft, five Airbus A380 aircraft, two Boeing 777-300 aircraft, four Boeing 787-800 aircraft and one Embraer E190 aircraft.

Liquidity
The Group’s liquidity position remains strong with £2.5 billion of cash, cash equivalents and other interest-bearing deposits (2013: £1.9 billion). Net debt stood at £2.0 billion (2013: £2.0 billion). Refer to Note 8 of the summary consolidated financial statements for further discussion around net debt.

During 2013, the Group obtained an additional source of financing from the issuance of BA’s Enhanced Equipment Trust Certificates (‘EETC’). This was the first time that the Group had used EETC’s and that this form of financing had been used in the UK. A total of $927 million was raised from the issuance which was used to fund the purchase of six Airbus A320-200s, two Boeing 777-300ERs and six Boeing 787-800s. In connection with this issuance, the Group also received an additional $369 million of funding from Japanese Operating Lease structure with Call Option (‘JOLCO’) investors bringing the total finance lease facility available to $1.3 billion. As of 31 December 2014, £nil (2013: $431 million (£264 million)) of the EETC and £nil (2013: $170 million (£104 million)) of the JOLCO facility were undrawn.

In addition, the Group had undrawn long-term committed aircraft financing facilities totalling £1.8 billion (2013: £1.7 billion) and further committed general facilities of £0.6 billion (2013: £0.5 billion).

No dividend will be paid for the year ending 31 December 2014.

Principle risks and uncertainties
During the year BA has continued to maintain and operate its structure and processes to identify, assess and manage risks. The principal risks and uncertainties affecting the Group are further detailed for the year ended 31 December 2014 in the Annual Report and Accounts.

The risks include competition, consolidation and deregulation, government intervention, infrastructure constraints, brand reputation, economic conditions, employee relations, failure of critical suppliers, failure of a critical IT system, pandemic, safety/security incidents, events causing significant network disruption, debt funding, fuel price, pensions and compliance with Competition, Bribery and Corruption law.


Directors’ responsibility statement
The Directors as listed in the Annual Report and Accounts for the year ended 31 December 2014, confirm that, to the best of each person’s knowledge:

  • The Group financial statements in this report, which have been prepared in accordance with IFRS as adopted by the European Union, IFRIC interpretation and those parts of the Companies Act 2006 applicable to companies reporting under IFRS, give a true and fair view of the assets, liabilities, financial position and profit/loss of the Group; and
  • The management report contained in this report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

 

Ends

 

Note to Editors:

Certain statements included in this report are forward-looking and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements.

Forward-looking statements can typically be identified by the use of forward-looking terminology, such as "expects", "may", "will", "could", “should”, "intends", "plans", "predicts", "envisages" or "anticipates" and include, without limitation, any projections relating to results of operations and financial conditions and British Airways Plc (’BA’ or the’ Group’) as well as plans and objectives for future operations, discussions of the Group’s Business Plan, expected future revenues, financing plans and expected expenditures and divestments. All forward-looking statements in this report are based upon information known to the Group at the date of this report. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

It is not reasonably possible to itemise all of the many factors and specific events that could cause the Company’s forward-looking statements to be incorrect or that could otherwise have a material adverse effect on the future operations or results of an airline operating in the global economy. Further information on the primary risks of the business and the risk management process of the Group is given in the Annual Report and Accounts 2014; these documents are available on www.iagshares.com.

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