BA on course for record profits

BRITISH Airways is about to stun the industry by becoming the world's most profitable airline for an unprecedented second successive year. The company will report operating profits of more than £525m for the year ending 31 March when it announces final results in May. Last year, the operating surplus was only £405m.

The financial triumph in the face of huge fuel price rises and ruthless competition from subsidised rival American carriers will form a remarkable legacy from Rod Eddington, the carrier's departing Australian chief executive.

When he arrived in 2000, morale was low, the company reported pre-tax losses of £241m and was languishing at 21st place in the profitability league.

The figures, to be announced on Friday 13 May, are expected to trigger bonuses for all employees. All 43,000 non-management staff can expect an extra week's pay or a minimum of £500. Management will receive more.

Eddington, who last year waived a £100,000 bonus, is this year expected to return to Perth, Western Australia, with substantially larger bonus . His young successor, Willie Walsh, the former Aer Lingus chief executive who takes over in September, will have to use all his cost-cutting skills if he is to keep BA at the top of the profitability league.

Eddington told Financial Mail on Sunday that cutting costs was 'part of a never-ending journey'. He said: 'You can never relax, you have always got to keep an eye on them.'

In his five years at the airline, Eddington has axed 15,000 jobs, but staff costs and the price of aviation fuel continue to rise. And BA still has to finance huge debts, though they have fallen from £6bn to £3.5bn.

Walsh is expected to take the opportunity of BA's move in 2007 to Heathrow Terminal 5 to cut job numbers further. The airline is not expecting to increase the fuel surcharge on ticket prices, even though oil prices are predicted to go as high as $60 a barrel.

Eddington is eager to quit - 'I had 11 September, soaring fuel prices, Sars, the Concorde crash and subsidised competition from the Americans over the Atlantic route on my watch,' he said. 'I hope Willie, who is a great guy, will have a touch of the Irish luck. The airline needs it.'

Walsh was recruited by Eddington over a drink only 24 hours after quitting the Irish airline last November. 'I was in Dublin for a meeting and it so happened that it was the day after Willie walked out of Aer Lingus,' said Eddington. 'It was a very pleasant drink - or a couple of drinks. It was obvious that I was looking at a man who could take over at BA.'

Thus was the no-nonsense 43-year-old recruited to one of the most demanding jobs in aviation. And the man who joined Aer Lingus as a trainee pilot, aged 17, has few doubts about his abilities.

After leaving the Irish airline, which he turned round in his three-year tenure, he explained: 'I believe the job that has been achieved since I took over as chief executive has been exceptional. I don't believe anybody can criticise me or my management team for anything we have done.'

Walsh transformed Aer Lingus, cutting its workforce by half.