BA's terror alert bill hits Ł100m

BBC
Nov. 03, 2006

Tough airport security measures brought in after August's terror alert have cost British Airways Ł100m.

The measures, which introduced strict limits on hand luggage and regular searches, caused widespread disruption.

BA said profits in the three month period including August fell 27%, but over the six-month period to 30 September profits rose 1.6% to Ł371m.

The carrier also revealed plans to sell its loss-making regional airline BA Connect to rival Flybe.

BA Connect, which handles most of BA's domestic and European routes that do not fly out of Heathrow or Gatwick, is due to be sold next year for an undisclosed sum.

Security row

Tougher security measures were introduced in August after police disrupted an alleged plot to blow up planes flying from the UK.

The move led to cancellations and lengthy delays for air travellers - BA had to cancel 1,280 flights between 10 and 17 August. The new security measures were fiercely criticised by leading airlines, and Ryanair is seeking compensation from the government.

Hand luggage restrictions - which limited passengers to taking one, small bag on board with them - were eased slightly in September although passengers are still limited to taking one item.

However, the ban on liquids being taken in cabin luggage is to be relaxed, the government said on Thursday.

Fuel costs

BA said the cost of the terror alert, combined with losses relating to BA Connect and high fuel prices, cut its profits to Ł176m in the three months to the end of September, down 27% on the same point last year.

But over the longer six-month period sales rose 8% to Ł4.6bn.

BA's fuel bill for the year as a whole is likely to be Ł400m - or about 30% higher than last year.

This increased cost, added to the financial impact of the security measures at Heathrow and other airports, has led BA to reduce its forecast for annual sales growth by half a percentage point to 4.5%-5%.

"Long haul premium transfer and shortfall premium traffic, although recovering, continue to be affected by the tighter security arrangements currently in place," BA said in a statement.