Despite Large Profits, British Airways To Raise Airfare

London, England (AHN) - British Airways registered a pre-tax profit of $1.7 billion (883 million pound) for 2007. Despite this windfall, the air carrier announced Thursday plans to hike airfare, cut flights and reduce its order of new aircraft.

The airline's pre-tax profit was $1.19 billion (611 million pound) in 2006. Following the announcement of higher profits, BA's shares increased percent to $455 (233 pound).

BA employees shared the windfall of $68.4 million (35 million pound), although Willie Walsh, chief executive of the airlines, waived his $1.36 million (700,000 pound) bonus as atonement for the Terminal 5 chaos.

But it may take sometime before BA again experiences mega profits as soaring oil prices may cause its fuel bill to exceed $5.86 billion (3 billion pound) in the coming fiscal year.

While no definite number had been cited by British Airways for its planned fare increase and reduction of flights, BA said it might cancel orders from Airbus for 18 Boeing 787 jets and seven A380 superjumbos.

Wading though the numbers, Douglas McNeill, analyst of Blue Oar Securities, told the Guardian Unlimited, "They (BA) seem to be charting a course which will see them sacrifice volume for price rises. They hope to push through price rises and see the customer base become less price sensitive as a result. You are then left with customers that have a need to travel. That's a plausible hope but it remains to be seen whether it works in practice."