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BRITISH AIRWAYS 2nd Quarter & Interim Results 2004/05

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.

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BRITISH AIRWAYS 2nd Quarter & Interim Results 2004/05

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  1. 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 Company’s plans and objectives for future operations, including, without limitation, 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 publicity update or revised 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 Company’s forward looking statements to be incorrect or that could otherwise have 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 Company’s SEC filings, including, without limitation the Company’s Report on Form 20-F for the year ended March 2004.

  2. BRITISH AIRWAYS 2nd Quarter & Interim Results 2004/05 8th November 2004

  3. Martin Broughton Chairman

  4. John Rishton Chief Financial Officer

  5. Headline numbers Period ended September 30, 2004 3 MONTHS £m VLY 6 MONTHS £m VLY Turnover 2,026 2.2% 3,951 3.6% Operating profit 240 23.1% 390 66.0% Operating margin 11.8 2.0pts 9.9 3.7pts EBITDAR 506 15.8% 878 24.5% Pre-tax profit 220 nm 335 nm

  6. Cost performance offset fuel increase £m Operating profit increase Revenue Cost performance Fuel spend 32 45 43 (30)

  7. 2003/04 2004/05 2002/03 Revenue up …. slightly %

  8. 2003/04 2004/05 2002/03 Passenger yield p/RPK remains weak Yield per RPK vly %

  9. Yield analysis % VLY Price (1.8) Mix 0.1 Exchange (3.4) (5.1)

  10. 2003/04 2004/05 2002/03 More seats filled Passenger seat factor vly % age points

  11. Quarter 2 costs • Capacity up 3.1% • Net costs down 3.2% • Unit costs reduced by 6.1%

  12. Net costs down 3.2% Employee costs 561 7.7% up Handling, catering etc 238 4.8% down Selling costs 126 17.6% down Engineering 118 6.3% down Fuel & oil 271 12.4% up Other 269 22.0% down NET OPERATING COST 1,583 3.2% down £m vly

  13. 2004/05 2003/04 2002/03 Cost performance % Cost reduction vly Net costs Unit costs

  14. Fuel prices continue to rise

  15. Strong fuel hedging positionthis year Hedging cover Average cap (Brent equivalent) Nov – Mar ’05 75% $32

  16. Strong fuel hedging positionnext year

  17. Fuel surcharges - £160m this year Effective 13/5/04 £2.50 flat charge per LH and SH sector Effective 11/8/04 LH sector charge increased to £6 Effective 14/10/04 LH sector charge increased to £10 SH sector charge increased to £4 Plus Cargo fuel surcharges £50m £20m £20m £70m

  18. Cashflow before financing £m 868 738 495 367 348 214 54 Half year ended 30 September

  19. Cash 1.9 Facilities 0.4 Total liquidity 2.3 Liquidity remains strong Sept 2004 £bn

  20. Net debt £3.3bn lower £m £3.3bn Sep 01 Dec 01 Mar 02 Jun 02 Sep 02 Dec 02 Mar 03 Jun 03 Sep 03 Dec 03 Mar 04 Jun 04 Sep 04

  21. Early debt repayment Q2 Half year Scheduled 138 247 Early 225 366 Total 363 613

  22. Debt repayments fall December 2001 repayment profile £m equivalent Current repayment profile Year ended March 31

  23. 2003/04 2004/05 Gearing down from March %

  24. In summary Steady progress

  25. Rod Eddington Chief Executive Officer

  26. What we have said • Fix the business • Fix the balance sheet

  27. Steady progress • Procurement £300 million • ceBA and other £150 million • Employee costs £300 million • Balance sheet Reduce debt

  28. Procurement delivering £300m • Price • Demand control • Specification . . . . a step change in company behaviour

  29. ceBA delivering £100 million • ba.com • on line booking • manage my booking • up selling • boarding passes • Executive Club • e-ticket • Self service check-in

  30. Achievements: ba.com bookings up 80 Weekly online bookings (in '000s) 70 60 50 40 30 20 10 monthly average online bookings are up 26% against last year 0 J-03 J-03 J-03 J-04 J-04 J-04 A-03 A-03 A-04 A-04 S-03 S-04 O-02 M-03 M-03 O-03 M-04 M-04 F-03 F-04 N-02 D-02 D-02 N-03 D-03 D-03

  31. Shorthaul leisure distribution Other direct 6% Other direct 9% contactBA 3% contactBA 17% Trade 38% Trade 54% ba.com 53% ba.com 20% April 2002 September 2004

  32. It’s clear what you have bought. Buying upgrades is easy

  33. Do it online - save time at the airport Book seat Book meal FFP number Check-in Itinerary Book hotel API ALL ON LINE

  34. Print your own boarding pass for over 31 european airports I can travel with my home printed boarding pass from London City - the first airport in England

  35. Executive Club 80% Executive Club Self Service usage 70% 70% 60% 50% actual 40% target forecast 30% Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 03 03 03 03 03 03 03 04 04 04 04 04 04 04 04 04 04 04 04 05 05 05

  36. ba.com bookings + servicing 30% Bookings 25% APIS Manage My Booking 20% 15% Pax Using ba.com Pre-Departure 10% 5% 0% Jun 01 Aug 01 Oct 01 Jan 02 Mar 02 May 02 Aug 02 Oct 02 Dec 02 Mar 03 May 03 Jul 03 Sep 03 Dec 03 Feb 04 Apr 04 Jul 04 Sep 04

  37. e-ticket take up %

  38. Self service check-in 20.0% 18.9% SSK Check-ins 18.0% OL Check-ins Total Self Service actual 16.0% 14.0% 14.5% 12.0% % of total check-in transactions 10.0% 8.0% 6.0% 4.4% 4.0% 2.0% 0.0% Mar Apr May Jun Jul 03 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 04 Aug Sep 03 03 03 03 03 03 03 03 03 04 04 04 04 04 04 04 04

  39. Transformational targets • 100% e-ticket usage • 50% Self-service check-in (on and off airport) • 80% core Exec Club interactions self-service • 35% visit ba.com before they fly • 45% email address capture • 60% pre airport APIS data collection

  40. Employee costsdelivering £300 million • Some progress • Delayed by pay deal • 2 years clear air • Changes to working practices

  41. Balance sheet • Operating business • Capital expenditure • Disposals

  42. Balance sheet In 3 years • Net debt down by £3.3 billion • Early debt repayment £710 million • Cash flow up £2.3 billion • Capital expenditure Reduced • Disposals £1.4 billion • Unencumbered aircraft from 13 to 59

  43. Steady progress No quick fixes

  44. 2004/5 revenue outlook unchanged • Capacity up 2-3% • Seat factor up • Yield down • Revenue up 2-3%

  45. Cost headwinds remain • Cost headwinds • Pensions • Pay • Fuel • Volume related costs • Landing charges • Cost initiatives • Procurement • ceBA • Employee costs

  46. October traffic statistics • ASKs +0.1% • RPKs +1.8% • Seat factor +1.2% • Premium +0.8%

  47. Summary • Steady progress • Business initiatives continue • Outlook challenging • 10% remains our goal

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