Europe's third biggest airline sets aside nearly $700 million in preparation for potential fines from U.S. and U.K. regulators.
British Airways, Europe's third biggest airline, on Friday admitted fixing prices on fuel charges and set aside $692 million (£350 million pounds) to pay potential fines from UK and U.S. regulators, hitting its shares.
BA (Charts) shares fell 3 percent after it reported a 13 percent decline in operating profit following a year in which passenger numbers were hit by new taxes, strike threats and tighter security against terrorism.
The carrier is being investigated by the UK and the United States for alleged price fixing on fuel surcharges, after British investigators were tipped off by rival Virgin Atlantic. On Friday it admitted staff had broken competition laws.
Fuel surcharges are hikes to airline ticket prices imposed to pass on rising fuel costs.
In related news, BA said it had made no final decision about how it would use its 10 percent shareholding in Spanish carrier Iberia, but reiterated it would not make an independent bid for the airline. It has already approached private equity companies about making a consortium offer.
Chief Executive Willie Walsh said BA had encountered some weakness in non-premium travel on the North Atlantic. The group said it expected to come in at the lower end of its 2008 guidance of 5 to 6 percent revenue growth.
"There's definitely an element of the weak dollar," Walsh told reporters. "But the premium market remains quite strong."
He said: "The domestic non-premium market is another area where we've seen weakness, particularly since the changes in security arrangements."
Negative surprise
Operating profit was $1.2 billion (£602 million) in the year to March 31, compared to $1.4 billion (£694 million) a year earlier. Pretax profit was down 0.8 percent to 611 million.
"This was not a bad result given the August security disruption, December fog and January labor disruption," said analyst Andrew Fitchie at Collins Stewart.
The airline suffered from disruption at Heathrow as security was tightened when police said they had foiled a plot to bomb transatlantic airliners using liquid explosives.
BA estimated the upheaval cost it around $197 million, while the threat of cabin crew strikes in January cut $160 million off revenues.
"In total there was a $455 million hit as a result of all the issues we faced during the year," said Walsh.
-World News Report
British Airways, Europe's third biggest airline, on Friday admitted fixing prices on fuel charges and set aside $692 million (£350 million pounds) to pay potential fines from UK and U.S. regulators, hitting its shares.
BA (Charts) shares fell 3 percent after it reported a 13 percent decline in operating profit following a year in which passenger numbers were hit by new taxes, strike threats and tighter security against terrorism.
The carrier is being investigated by the UK and the United States for alleged price fixing on fuel surcharges, after British investigators were tipped off by rival Virgin Atlantic. On Friday it admitted staff had broken competition laws.
Fuel surcharges are hikes to airline ticket prices imposed to pass on rising fuel costs.
In related news, BA said it had made no final decision about how it would use its 10 percent shareholding in Spanish carrier Iberia, but reiterated it would not make an independent bid for the airline. It has already approached private equity companies about making a consortium offer.
Chief Executive Willie Walsh said BA had encountered some weakness in non-premium travel on the North Atlantic. The group said it expected to come in at the lower end of its 2008 guidance of 5 to 6 percent revenue growth.
"There's definitely an element of the weak dollar," Walsh told reporters. "But the premium market remains quite strong."
He said: "The domestic non-premium market is another area where we've seen weakness, particularly since the changes in security arrangements."
Negative surprise
Operating profit was $1.2 billion (£602 million) in the year to March 31, compared to $1.4 billion (£694 million) a year earlier. Pretax profit was down 0.8 percent to 611 million.
"This was not a bad result given the August security disruption, December fog and January labor disruption," said analyst Andrew Fitchie at Collins Stewart.
The airline suffered from disruption at Heathrow as security was tightened when police said they had foiled a plot to bomb transatlantic airliners using liquid explosives.
BA estimated the upheaval cost it around $197 million, while the threat of cabin crew strikes in January cut $160 million off revenues.
"In total there was a $455 million hit as a result of all the issues we faced during the year," said Walsh.
-World News Report