FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Report of Foreign Issuer
Furnished Pursuant to Rule 13a - 16 or 15d - 16 of the
Securities Exchange Act of 1934
For the period ending 19 May 2003
BRITISH AIRWAYS Plc
Waterside HBA3, PO Box 365, Harmondsworth UB7 0GB
CONTENTS
1. Preliminary Financial Results 2002-2003
19 May 2003
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorised.
BRITISH AIRWAYS Plc
Date: 19 May 2003
Sarah Billington Manager Shareholder Services
PRELIMINARY FINANCIAL RESULTS 2002-2003
Three months ended Twelve months ended
March 31 Better/
March 31 Better/
2003 2002
(Worse)
2003 2002
(Worse)
Turnover £m 1,675 1,953
(14.2)%
7,688 8,340
(7.8)%
Operating (loss)/profit £m (164)
(45) nm
295 (110)
nm
Operating margin % (9.8) (2.3)
(7.5)pts
3.8 (1.3)
5.1pts
(Loss)/profit before tax £m (200)
(85) (135.3)%
135 (200)
nm
Retained (loss)/profit for the period £m
(133) (43) (209.3)%
72 (142)
nm
Net assets at period end £m 2,274
2,207 3.0%
2,274 2,207
3.0%
Earnings per share
Basic p (12.4) (4.0)
nm
6.7 (13.2) nm
Diluted p (12.4) (4.0)
nm
6.7 (13.2) nm
nm: Not meaningful
GROUP PROFIT AND LOSS ACCOUNT
Three months ended
Twelve months ended
March 31 Better/
March 31 Better/
2003 £m 2002 £m
(Worse) 2003 £m 2002
£m (Worse)
Traffic Revenue
Scheduled Passenger 1,423 1,653
(13.9)% 6,545
7,036 (7.0)%
Scheduled Cargo 111 120 (7.5)%
484 483
0.2%
Non-scheduled services 6 9 (33.3)%
45 52
(13.5)%
1,540 1,782 (13.6)%
7,074 7,571
(6.6)%
Other revenue 135 171 (21.1)%
614 769
(20.2)%
TOTAL TURNOVER 1,675 1,953 (14.2)%
7,688 8,340
(7.8)%
Employee costs 531 548 3.1%
2,107 2,329
9.5%
Depreciation and amortisation 180 171
(5.3)% 676
770 12.2%
Aircraft operating lease costs 63 52
(21.2)% 189
199 5.0%
Fuel and oil costs 206 186 (10.8)%
842 1,028
18.1%
Engineering and other aircraft costs 148 197
24.9% 566
673 15.9%
Landing fees and en route charges 125 137
8.8% 576
615 6.3%
Handling charges, catering and other operating costs 224
265 15.5%
961 1,110 13.4%
Selling costs 127 194 34.5%
706 824
14.3%
Accommodation, ground equipment costs and currency differences 151
168 10.1%
686 822 16.5%
Exceptional operating costs* 84 80
(5.0)% 84
80 (5.0)%
TOTAL OPERATING EXPENDITURE 1,839 1,998
8.0% 7,393
8,450 12.5%
OPERATING (LOSS)/PROFIT (164) (45)
(264.4)% 295
(110) 368.2%
Share of operating profits in associates 33 18
83.3% 39 22
77.3%
TOTAL OPERATING (LOSS)/PROFIT INCLUDING ASSOCIATES (131)
(27) (385.2)%
334 (88)
479.5%
Other income and charges (11) 20
(155.0)% (4)
21 (119.0)%
Profit on sale of fixed assets and investments 12 10
20.0% 60
145 (58.6)%
Interest
Net payable (52) (72)
27.8% (247)
(324) 23.8%
Retranslation (charges)/credits on currency
borrowings (18) (16) (12.5)%
(8) 46
(117.4)%
(LOSS)/PROFIT BEFORE TAX (200) (85)
(135.3)% 135
(200) 167.5%
Tax 70 46 52.2%
(50) 71
(170.4)%
(LOSS)/PROFIT AFTER TAX (130) (39)
(233.3)% 85
(129) 165.9%
Equity minority interestNon equity minority interest** (3)
(1)(3) nm
(13) (1)(12) nm(8.3)%
(LOSS)/PROFIT FOR THE PERIOD (133) (43)
(209.3)% 72
(142) 150.7%
RETAINED(LOSS)/PROFIT FOR THE PERIOD (133) (43)
(209.3)% 72
(142) 150.7%
nm: Not meaningful
* Relates to the impairment of Concorde capitalised modifications and rotable inventory
and the write down of Concorde expendable stock. The prior year relates to severence costs
under the 'Future Size & Shape' Review.
** Cumulative Preferred Securities
OPERATING AND FINANCIAL STATISTICS
Three months ended Twelve months ended
March 31 Increase/
March 31 Increase/
2003 2002 (Decrease)
2003 2002
(Decrease)
TOTAL AIRLINE OPERATIONS (Note 1)
TRAFFIC AND CAPACITY
RPK (m) 23,439 25,221 (7.1)%
100,112 106,270
(5.8)%
ASK (m) 33,729 34,988 (3.6)%
139,172 151,046
(7.9)%
Passenger load factor(%) 69.5 72.1
(2.6)pts 71.9
70.4 1.5pts
CTK (m) 991 1,005 (1.4)%
4,210 4,033
4.4%
RTK (m) 3,338 3,508 (4.8)%
14,213 14,632
(2.9)%
ATK (m) 5,165 5,319 (2.9)%
21,328 22,848
(6.7)%
Overall load factor (%) 64.6 66.0
(1.4)pts 66.6
64.0 2.6pts
Passengers carried (000) 8,547 8,831
(3.2)% 38,019
40,004 (5.0)%
Tonnes of cargo carried (000) 182 185
(1.6)% 764
755 1.2%
FINANCIAL
Passenger revenue per RPK (p) 6.10 6.59
(7.4)% 6.58
6.67 (1.3)%
Passenger revenue per ASK (p) 4.24 4.75
(10.7)% 4.74
4.69 1.1%
Cargo revenue per CTK (p) 11.20 11.94
(6.2)% 11.50
11.98 (4.0)%
Total traffic revenue per RTK (p) 46.14 50.80
(9.2)% 49.77
51.74 (3.8)%
Total traffic revenue per ATK (p) 29.82 33.50
(11.0)% 33.17
33.14 0.1%
Average fuel price before hedging (US cents/US gallon) 100.15
66.89 49.7%
86.01 81.29
5.8%
OPERATIONS
Average Manpower Equivalent (MPE) 50,309 53,410
(5.8)% 51,630
57,227 (9.8)%
ATKs per MPE (000) 102.7 99.6 3.1%
413.1 399.3
3.5%
Aircraft in service at period end 330 360
(30) 330
360 (30)
TOTAL GROUP OPERATIONS
FINANCIAL
Net operating expenditure per RTK (p) 51.05 52.08
(2.0)% 47.70
52.49 (9.1)%
Net operating expenditure per ATK (p) 32.99 34.35
(4.0)% 31.78
33.62 (5.5)%
Note 1 Excludes non airline activity companies, principally, Airmiles Travel Promotions
Ltd, BA Holidays Ltd,
BA Travel Shops Ltd, Speedbird Insurance Company Ltd and The London Eye Company Ltd.
CHAIRMAN'S STATEMENT
Group performance
Group profit before tax for the year was £135 million against a £200
million loss in the previous year. No interim dividend was paid and the Board has
recommended that no final dividend be paid.
The improvement in operating profit reflects substantial cost reduction initiatives,
particularly the delivery of the first year of the Future Size and Shape (FSAS) programme,
put in place in response to the deterioration in revenue caused by economic weakness and
terrorism. Revenue has deteriorated further due to competitor actions, war and SARS.
Group unit costs (pence/ATK), excluding exceptional charges, fell by 5.6% on capacity
(ATKs) 6.7% lower. Airline operations passenger yield (pence/RPK) for the full year
deteriorated by 1.3% compared with last year. The operating margin was 3.8%, 5.1 points
better than last year.
Cash inflow before financing was £1,231 million for the twelve months. The
closing cash balance of £1,652 million was up £433 million versus last
year. Net debt fell by £1,145 million from March 31 last year to £5,149
million - - its lowest level since September 30, 1998 - - and is down £1.4
billion from the December 2001 peak.
As expected, the fourth quarter results were particularly affected by the conflict in
Iraq. The loss before tax for the quarter was £200 million, £115 million
worse than last year. Excluding exceptional charges and restructuring costs, the operating
loss for the quarter was £80 million, £115 million worse than last year.
Unit costs per ATK excluding exceptional items improved by 4.5% but yield (pence/ RPK)
deteriorated by 7.4% and seat factor was down 2.6 points to 69.5%.
Turnover
For the twelve months, group turnover - - at £7,688 million - - was down 7.8% on
a flying programme 6.7% smaller in ATKs. Airline operations passenger yields for the year
were down 1.3% per RPK; seat factor was up 1.5 points at 71.9%, on capacity 7.9% lower in
ASKs.
Group turnover for the quarter was down 14.2% - - at £1,675 million - - on
capacity 2.9% lower in ATKs. Passenger yields were down 7.4% per RPK with seat factor down
2.6 points at 69.5% on capacity 3.6% lower in ASKs.
Cargo volumes for the full year (CTKs) were up 4.4% compared with last year, with yields
down 4.0%. For the quarter, cargo volumes (CTKs) were down 1.4% compared with last year,
with yields down 6.2%.
Overall load factor for the full year was up 2.6 points at 66.6%, and for the quarter down
1.4 points at 64.6%.
Costs
For the quarter, unit costs excluding exceptional charges (pence/ATK) improved by 4.5% on
the same period last year. This reflects a net cost reduction of 7.3% on capacity 2.9%
lower in ATKs. Including exceptional charges, unit costs (pence/ATK) improved by 4.0%.
Significant reductions were achieved in most categories of operating cost, including
engineering and other aircraft costs down 24.9%, selling and marketing costs down 34.5%,
and accommodation and other costs down 10.1%. Fuel and oil costs increased by 10.8% (due
to the increase in price only partially offset by hedging), depreciation costs increased
by 5.3% and aircraft operating lease costs increased by 21.2% due to an onerous lease
provision of £27 million for the sub-lease of the Jetstream 41 (J41) fleet from
British Airways CitiExpress to Eastern Airways. The J41 sub-lease is a significant element
of the ongoing drive to simplify the British Airways CitiExpress fleet and network and
eliminate unprofitable routes.
The fourth quarter results include exceptional charges of £84 million relating to
Concorde - - on April 10 it was announced that the Concorde fleet will be retired from
service in October 2003. The exceptional charges comprise the impairment of capitalised
modifications and rotable inventory, together with the write-down of Concorde expendable
stock.
For the twelve months, unit costs excluding exceptional charges (pence/ATK) improved by
5.6% on the same period last year. This reflects a net cost reduction of 11.9% on capacity
6.7% lower in ATKs. In total costs for the year were £1 billion lower than last
year.
Non-operating items
Net interest expense for the year was £255 million, £23 million lower
than the previous year. This included a charge for the revaluation of yen debt (used to
fund aircraft acquisitions) of £10 million, compared to a credit the previous
year of £49 million. The revaluation -- a non cash item required by standard
accounting practice -- results from the strengthening of the yen against sterling.
For the fourth quarter net interest expense was £70 million, down £18
million on last year.
Profits on disposals of fixed assets and investments for the year were £60
million, down £85 million from last year when our disposal of go in June 2001
generated £98 million. Profits on disposal for the quarter were £12
million, up £2 million on last year.
Other charges of £4 million for the year primarily relate to partial write-downs
of our investments in the trade exchange Cordiem and The Airline Group (NATS) partially
offset by a lease transfer fee. The £5 million write-down in the value of NATS
equity to £7.3 million reflects revised estimates of the future long term
returns.
Other income last year was £21 million, relating primarily to £22
million compensation received from the UK Government for the closure of US airspace
immediately following September 11th.
For the quarter, other charges were £11 million, relating to the partial
write-down of the investments in NATS and Cordiem.
Earnings per share
For the twelve month period, profits attributable to shareholders were £72
million, equivalent to earnings of 6.7 pence per share, compared with losses of 13.2 pence
per share last year. The loss attributable to shareholders for the fourth quarter was
equivalent to 12.4 pence per share, compared with last year's loss of 4.0 pence per share.
Net Debt / Total Capital ratio
Borrowings, net of cash and short-term loans and deposits, amounted to £5,149
million at the year end, a reduction of £1,145 million from last year, and
£1.4 billion from the December 2001 peak.
The year-end net debt/total capital ratio was 60.7%, a 5.3 point reduction from last year.
The net debt/total capital ratio including operating leases was 64.2%, a 4.9 point
reduction from last year.
Cash flow
Net cash inflow from operating activities totalled £1,185 million, up
£319 million from last year. The net cash flow before management of liquid
resources and financing was £1,231 million, an improvement of £717
million on last year, due to a reduction in capital expenditure and an increase in the
sale of fixed assets and investments as well as the improvement in operating cash flow.
Future Size and Shape
Annualised FSAS cost savings for the financial year 2002/03 totalled £570
million, £120 million better than target - - targets for all the FSAS programmes
(manpower costs, distribution, procurement and information technology) were exceeded.
The group manpower reduction since August 2001 totals 11,880, including a reduction of
10,182 against the FSAS target of 10,000.
Capital spend for the year was £319 million, well within the £450
million FSAS target. Disposal proceeds were £393 million for the year, taking the
cumulative FSAS total to £611 million, £111 million better than the
£500 million target.
Aircraft fleet changes
The number of group aircraft in service at March 31, 2003 was 330, a reduction of 30 on
the prior year. Aircraft disposals or returns to lessors comprised 9 Boeing 757-200, 2
Boeing 777, 6 Boeing 737-300, 2 Boeing 737-400, 4 de Havilland Canada DHC-8 and 2 Embraer
RJ145 aircraft. Deliveries comprised 11 Airbus A320 and 1 Embraer RJ145 aircraft. Of the
12 British Airways CitiExpress Jetstream 41 aircraft, 1 had been sub-leased and 11 stood
down pending sub-lease to Eastern Airways.
Other stand downs included 1 Boeing 757-200, and 2 Boeing 737-400 aircraft, together with
2 Concordes, reflecting the announcement on April 10 that the fleet will be retired from
service in October 2003.
Subsidiaries and Associates
Qantas issued new shares on two occasions during the year, by way of an institutional
placement and shareholder placing respectively. British Airways did not take up its
allocation, which resulted in the dilution of the groups shareholding from 21.4% to 18.9%.
On March 17, it was confirmed that easyJet do not wish to take up their option to buy dba;
during the period of the option British Airways received a total of £6.1 million
in capital contributions and option payments from easyJet.
Alliance Development
On April 9, the US Department of Transportation tentatively approved a broad behind/beyond
codesharing agreement between American Airlines and British Airways.
We continue to strengthen links with other partners and during the year code-share
agreements were extended with Finnair and Iberia, as well as outside oneworld with SN
Brussels.
Following LOT Polish Airlines decision to join the STAR alliance a number of bilateral
arrangements between British Airways and LOT focusing on the London Heathrow - Warsaw
route were terminated in March 2003.
Pensions
We continue to account for our group pension schemes under the current accounting standard
SSAP 24.
However we are also required to disclose the impact of the new standard FRS 17 in the
notes to the accounts. As at March 31, 2003 the accounting valuation of the Group pension
schemes under FRS 17 shows a post-tax deficit of £1.2 billion.
The FRS 17 valuation reflects a snapshot of the pension scheme assets and liabilities at
March 31, 2003 and does not impact employers contributions. The triennial actuarial review
of the main UK pension schemes (APS and NAPS) will be completed by the end of 2003 and
will determine any changes required to company contributions.
Outlook
We expect the business environment will continue to be challenging in 2003/04 ahead of an
economic recovery.
Forecasting revenue against a backdrop of continuing global economic weakness, SARS and
Middle East developments is very difficult, however, the outlook is that revenue in
Quarter 1 will be lower than last year. Visibility beyond the first quarter is not clear.
The implementation of our Future Size and Shape Programme and other cost cutting
initiatives is on track and delivering more than the expected cost savings.
Certain information included in these statements is forward-looking and involves risks and
uncertainties that could cause actual results to differ materially from those expressed or
implied by the forward looking statements.
Forward-looking statements include, without limitation, projections relating to results of
operations and financial conditions and the Companys plans and objectives for future
operations, including, without limitation, discussions of the Companys Future Size and
Shape programme, expected future revenues, financing plans and expected expenditures and
divestments. All forward-looking statements in this report are based upon information
known to the Company on 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 itemize all of the many factors and specific events that
could cause the Companys 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. Information on some factors which could result in
material difference to the results is available in the Companys SEC filings, including,
without limitation the Companys Report on Form 20F for the year ended March 2002.
GROUP BALANCE SHEET
March 31
2003 £m
2002 £m
FIXED ASSETS
Intangible assets 164
140
Tangible assets 9,487
10,474
Investments 524
489
10,175
11,103
CURRENT ASSETS
Stocks 87
109
Debtors 986
1,231
Cash, short-term loans and deposits
1,652
1,219
2,725
2,559
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
(2,904)
(3,201)
NET CURRENT LIABILITIES
(179) (642)
TOTAL ASSETS LESS CURRENT LIABILITIES
9,996
10,461
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Borrowings and other creditors
(6,441)
(6,985)
Convertible Capital Bonds 2005
(112)
(112)
(6,553)
(7,097)
PROVISION FOR DEFERRED TAX
(1,062)
(1,031)
PROVISIONS FOR LIABILITIES AND CHARGES
(107)
(126)
2,274
2,207
CAPITAL AND RESERVES
Called up share capital
271 271
Reserves 1,787
1,745
MINORITY INTEREST 2,058
2,016
Equity minority interest
10
9
Non equity minority interest
206
182
216
191
2,274
2,207
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Twelve months ended
March 31
2003 £m 2002
£m
Profit/(loss) for the period 72
(142)
Other recognised gains and losses relating to the period:
Exchange and other movements (38)
17
Total recognised gains and losses 34
(125)
These summary financial statements were approved by the Directors on May 19, 2003.
GROUP CASH FLOW STATEMENT
Twelve months ended
March 31
2003 £m
2002 £m
CASH INFLOW FROM OPERATING ACTIVITIES 1,185
866
DIVIDENDS RECEIVED FROM ASSOCIATES 23
16
GOVERNMENT COMPENSATION RECEIVED
22
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (249)
(327)
TAX (7) (1)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT 250
94
ACQUISITIONS AND DISPOSALS 29
(19)
EQUITY DIVIDENDS PAID
(137)
Cash inflow before management of liquid resources and financing
1,231 514
MANAGEMENT OF LIQUID RESOURCES (289)
(301)
FINANCING (784)
(217)
Increase/(decrease) in cash in the period 158
(4)
NOTES TO THE ACCOUNTS
For the period ended March 31, 2003
1 ACCOUNTING CONVENTION
The accounts have been prepared on the basis of the accounting policies
set out in the Report and Accounts for the year ended March 31, 2003 in accordance with
all applicable United Kingdom accounting standards and the Companies Act 1985 and are
consistent with those applied in the previous year. Due to the increasing incidence of the
purchase of airport landing rights, these have been reclassified from tangible fixed
assets to intangible fixed assets and the comparative figures restated accordingly.
Twelve months ended
March 31
2003 £m 2002 £m
2 RECONCILIATION OF OPERATING PROFIT
TO CASH INFLOW FROM OPERATING ACTIVITIES
Group operating profit/(loss)
295 (110)
Depreciation and amortisation
734 770
Decrease in stocks and debtors
238 250
Decrease in creditors
(62) (89)
(Decrease)/increase in provisions for liabilities and charges
(20) 45
Cash inflow from operating activities
1,185
866
3 RECONCILIATION OF NET CASH FLOW TO
MOVEMENT IN NET DEBT
Increase/(decrease) in cash during the period
158 (4)
Net cash outflow from decrease in debt and lease financing
784 217
Cash outflow from liquid resources
289 301
Change in net debt resulting from cash flows
1,231 514
New finance leases taken out and hire purchase arrangements made
(221) (512)
Assumed from subsidiary undertakings acquired during the period
(117)
Conversion of Convertible Capital Bonds
1
Exchange movements
135 43
Movement in net debt during the period
1,145 (71)
Net debt at April 1
(6,294) (6,223)
Net debt at period end
(5,149) (6,294)
Three months ended Twelve months ended
March 31
March 31
2003 £m
2002 £m
2003 £m 2002
£m
4 OTHER INCOME AND CHARGES
Income from trade investments
1
Government compensation
22
22
Other (11)
(2) (4)
(2)
(11)
20 (4)
21
Other income and charges represented by:
Group (11)
20 (4)
21
(11)
20 (4)
21
NOTES TO THE ACCOUNTS (continued)
For the period ended March 31, 2003
Three months ended Twelve months ended
March 31
March 31
2003 £m
2002 £m
2003 £m
2002 £m
5 PROFIT ON SALE OF FIXED ASSETS AND INVESTMENTS
Net profit on disposal of go (Note 1 below)
10 98
Net profit on disposal of shares in France Telecom (formerly shares
held in Equant)
23
Net profit on disposal of other fixed assets and investments
12 10
50 24
12
10 60
145
Represented by:
GroupAssociates 102
73
582 1423
12
10 60
145
Note 1 - The current year profit on disposal of go relates to the
additional contracted proceeds resulting from the onward sale by 3i Plc to easyJet.
6 INTEREST
Net payable:
Interest payable less amount capitalised
69 78
310
374
Interest receivable (17)
(6)
(63) (50)
52
72
247 324
Retranslation charges/(credits) on currency borrowings
18 16
8
(46)
70
88
255 278
Net interest payable represented by:
Group 69
85
253 271
Associates 1
3 2
7
70
88
255 278
7 TAX
The tax charge for the year is £50 million made up of a
current tax charge of £19 million representing share of associates tax of
£21 million and overseas tax of £8 million, a prior year tax credit of
£10 million and £31 million by way of deferred taxes in the UK. The
deferred tax provision is included on balance sheet and amounts to £1,062 million
at March 31, 2003 (March 31, 2002: £1,031 million).None of the deferred tax is
expected to become payable in the foreseeable future.
8 EARNINGS PER SHARE
Basic earnings per share for the quarter ended March 31, 2003 are
calculated on a weighted average of 1,069,884,000 ordinary shares (March 2002:
1,076,090,000) and for the twelve months ended March 31, 2003, on a weighted average of
1,073,054,000 ordinary shares (March 2002: 1,076,042,000) as adjusted for shares held for
the purposes of employee share ownership plans including the Long Term Incentive Plan.
Diluted earnings per share for the quarter ended March 31, 2003 are calculated on a
weighted average of 1,069,884,000 ordinary shares (March 2002: 1,076,090,000) and for the
twelve months ended March 31, 2003 on a weighted average of 1,073,054,000 shares (March
2002: 1,077,966,000).The number of shares in issue at March 31, 2003 was 1,082,784,000
(March 31, 2002: 1,082,757,000) ordinary shares of 25 pence each.
NOTES TO THE ACCOUNTS (continued)
For the period ended March 31, 2003
March 31
2003 £m 2002 £m
9 INTANGIBLE ASSETS
Goodwill
99 105
Landing rights
65 35
164 140
10 TANGIBLE ASSETS
Fleet
7,828 8,672
Property
1,219 1,300
Equipment
440 502
9,487 10,474
11 INVESTMENTS
Associated undertakings
461 425
Trade investments
32 39
Investment in own shares
31 25
524 489
12 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Loans
57 62
Finance Leases
124 208
Hire Purchase Arrangements
362 409
543 679
Corporate tax
19 29
Other creditors and accruals
2,342 2,493
2,904 3,201
13 BORROWINGS AND OTHER CREDITORS FALLING DUE AFTER MORE THAN ONE YEAR
Loans
1,275 1,483
Finance Leases
2,430 2,404
Hire Purchase Arrangements
2,441 2,835
6,146 6,722
Other creditors and accruals
295 263
6,441 6,985
14 RESERVES
Balance at April 1
1,745 1,850
Retained profit/(loss) for the period
72 (142)
Exchange and other adjustmentsGoodwill written back on disposals
(38)8 1720
1,787 1,745
15 The figures for the three months ended March 31, 2003 are unaudited
and do not constitute full accounts within the meaning of Section 240 of the Companies Act
1985. The figures for the twelve months ended March 31, 2003 form part of the Annual
Report and Accounts and were approved by the Board of Directors today but have not been
delivered to the Registrar of Companies; the report of the auditors on the accounts is
unqualified.The figures for the year ended March 31, 2002 have been extracted from the
full accounts with certain minor presentational changes for that year, which have been
delivered to the Registrar of Companies and on which the auditors have issued an
unqualified audit report.
UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (US GAAP) INFORMATION
The accounts have been prepared in accordance with accounting principles accepted in the
United Kingdom which differ in certain respects from those generally accepted in the
United States. The significant differences are the same as those set out in the Report and
Accounts for the year ended March 31, 2003, and are consistent with those of the previous
year with the exception of the implementation of SFAS 142 Goodwill and Other Intangible
Assets from April 1, 2002.SFAS 142 introduces the requirements to test goodwill and
intangible assets with indefinite lives for impairment rather than amortise them.
Amortisation of goodwill charged under UK GAAP on goodwill and intangible assets with
indefinite lives has been reversed for US GAAP. During the second quarter of 2002, the
group performed an initial evaluation of its goodwill and determined that there was no
impairment. As at March 31, 2003 the group completed an annual impairment test, as
required by SFAS 142. Using the British Airways Group as the reporting unit, various
valuation methods were evaluated before concluding that market capitalisation was the
primary method of determining fair value for the purposes of SFAS 142. As a result, the
groups net carrying value was in excess of the groups market capitalisation as at March
31, 2003 and a goodwill impairment charge of £399 million representing the entire
balance of the groups goodwill was recognised under US GAAP.
The adjusted net income and shareholders equity applying US GAAP are set out below:
Three months ended Twelve months ended
March 31 March 31
2003 £m 2002 £m
2003 £m
2002 £m
(Loss)/profit for the period as reported in the group profit and loss account
(133)
(43)
72 (142)
US GAAP adjustments (391)
(12)
(200) 23
Net income as so adjusted to accord with US GAAP
(524)
(55)
(128) (119)
Net income per Ordinary Share as so adjusted
Basic (49.0)p
(5.1)p
(11.9)p
(11.1)p
Diluted (49.0)p
(5.1)p
(11.9)p
na
Net income per American Depositary Share as so adjusted
Basic (490)p
(51)p
(119)p
(111)p
Diluted (490)p
(51)p
(119)p
na
March 31
2003 £m 2002 £m
Shareholders equity as reported in the group balance sheet
2,058 2,016
US GAAP adjustments
(126) 65
Shareholders equity as so adjusted to accord with US GAAP
1,932 2,081
AIRCRAFT FLEET
NUMBER IN SERVICE WITH GROUP COMPANIES AT MARCH 31, 2003
Changes
On balance Operating Total
since
sheet Leases off March
March Future
Aircraft balance sheet 2003
2002 Deliveries Options
AIRLINE OPERATIONS (Notes 1 & 2)
Concorde (Note 3) 5 5
(2)
Boeing 747-400(Note 4) 56 56
Boeing 777 43 43
(2)
Boeing 767-300 (Note 5) 21 21
Boeing 757-200 13 13
(10)
Airbus A319 (Note 6) 21 12 33
3 99
Airbus A320 11 13 24
11 6
Airbus A321
10
Boeing 737-300 21 21
(6)
Boeing 737-400 19 8 27
(4)
Boeing 737-500 10 10
Turbo Props (Note 7) 28 28
(16)
Embraer RJ145 16 12 28
(1) 17
Avro RJ100 16 16
British Aerospace 146 5 5
GROUP TOTAL 210 120 330
(30) 19 116
Aircraft Fleet Notes:
1 Includes those operated by British Airways Plc, CityFlyer Express, dba
and British Airways CitiExpress.
2 Excludes 2 Boeing 737-400s, 1 Boeing 757-200 stood down pending
disposal or return to lessor and 11 Jetstream 41s stood down pending sub-lease to Eastern
Airways and 1 Jetstream 41 sub-leased to Eastern Airways.
3 Excludes 2 Concordes stood down pending retirement of the fleet.
4 Excludes 1 previously sub-leased Boeing 747-400 temporarily stood down
following return from Qantas.
5 Includes 2 Boeing 767-300s temporarily out of service.
6 Certain future deliveries and options include reserved delivery
positions and may be taken as any A320 family aircraft.
7 Includes 13 British Aerospace ATPs, 5 ATR72s and 10 de Havilland
Canada DHC-8s.