BA World Cargo’s yields down, productivity up
British Airways World Cargo saw its cargo yields and revenue fall in the fiscal year ending March 31, despite an increase in traffic, but it said substantial productivity gains and staff cuts over the same period led to an improvement in its results.
Cargo revenue decreased 4.3 percent in local currency during the year to '463 million ($820 million) from '484 million in the year ended March 31, 2003. Excluding the effect of exchange rates such as the weak dollar, flown revenue was up 1.9 percent in the latest financial year, the company said.
British Airways said its yield, measured in revenue per cargo ton-kilometer, dropped 9.7 percent to 10.4 pence (18 cents). The bulk of the decrease was due to the depreciation of the U.S. dollar against the pound, a spokesman for the company said.
“This year has been tough for the industry with issues such as the war in Iraq, SARS and the continuing softening of the U.S. dollar,” said Gareth Kirkwood, managing director of British Airways World Cargo.
British Airways handled 4.5 million cargo ton-kilometers in the latest financial year, an increase of 6 percent.
“As a result of the introduction of the third freighter in August 2003 and the short-haul European freighters in October 2003, capacity increased by 4 percent during 2003/2004,” the company added.
Kirkwood told a press conference in London Tuesday his company and other airlines are facing continued pressure on yields for cargo shipments.
Yields in the export trades from the United Kingdom and the United States in particular are affected by surplus capacity, he said. Export air cargo shipments from America are “a very weak market” and Europe has “a difficult yield environment,” he added. “Yield remains an issue for us and remains an issue for the whole industry.”
However, British Airways World Cargo said it has raised the tonnage it handles per man-hour by 22 percent in the latest financial year, largely through automation. The company reduced its workforce levels from the equivalent of 3,000 people in March 2003 to 2,200 in March of this year, taking into account overtime hours. Kirkwood did not quantify how many jobs the company has eliminated.
Kirkwood also claimed that British Airways World Cargo has completed a turnaround in the last two years and taken out “significant costs,” but did not disclose specific figures on profits and costs. He said the British Airways group publishes consolidated financial results without breaking down results by division.
British Airways World Cargo is discussing a potential renewal of its joint short-haul European freighter service with DHL. The current contract, effective since last October, covers 40 flights a week across Europe and is due expire in July. The company said the contract has been profitable.
The airline said it has expanded the proportion of cargoes it ships on freighters from about 15 percent to 20 percent because of the replacement of former wide-body aircraft by narrow-body airplanes that provide less belly-hold capacity.
Following the new air service agreement between the United Kingdom and China on freighter services, British Airways World Cargo said it is “interested in” operating a freighter service on the route, and is working on a related business plan.