Summary of the headline figures

In January 2003, overall load factor improved by 0.9 points to 63.4 per cent. Passenger capacity, measured in Available Seat Kilometres, was 2.8 per cent below January 2002 and traffic, measured in Revenue Passenger Kilometres, was lower by 1.8 per cent. This resulted in a passenger load factor improvement of 0.6 points versus last year, to 69.2 per cent. The fall in traffic comprised a 7.6 per cent reduction in premium traffic and a 0.8 per cent decrease in non-premium traffic. Cargo, measured in Cargo Tonne Kilometres, increased by 0.5 per cent.

 Market conditions

The economic and political environment continues to be challenging.

 Strategic Developments

British Airways announced its shorthaul summer 2003 schedule which includes new routes from London Gatwick and Manchester airports and increased services on profitable routes to Europe.

At Heathrow, there will be an additional daily service to Brussels and Copenhagen, three extra weekly flights to Helsinki and two extra weekly flights to Larnaca in Cyprus. Services to Belgrade will move from Gatwick to Heathrow where there will be four flights each week. At Manchester, there will be three new services with daily flights to Bologna, Pisa and Vienna and extra daily frequencies to Geneva, Glasgow, Hanover and Rome and an additional weekly service to Lyon. Services to Gothenburg will be suspended.

The airline began wearer trials of a new uniform for customer contact staff.

British Airways submitted its detailed response to the CAA as part of the consultation process on airport charges. It said an increase in airport charges of 6.5 per cent above inflation at Heathrow from April 2003 - 2008 means airlines are being asked to pay £300m in advance for airport services which they and their passengers won’t benefit from for many years. The submission also said the increase in charges was based on an unreasonably high cost of capital at 7.75 per cent compared with BAA’s historic cost of capital of below 7 per cent. Other UK utility regulators use a cost of capital of 6-6.5 per cent. Financial analysts’ cost of capital estimates are in the range of 6-7 per cent.

ends

Certain information included in this statement 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, discussions of the Company’s ‘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 itemise 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 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 Company’s SEC filings, including, without limitation the Company’s Report on Form 20-F for the year ended March 2002.

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