British Air Forecast Lifts London Stocks

123jump.com Staff
07 Nov, 2008
New York City

British Airways lifted its revenue guidance to 4% from earlier projection of 3% increase. However, the six-month net dropped 75%. Commodities and energy stocks rallied on an increase in crude oil and metal prices. Stocks in London trading rose 1.8%.

[R]2:00PM New York, 7:00PM London - Commodity stocks rise on higher metal and oil prices. British raised its revenue guidance after it declared profit decline of 75% in the six-month period.[/R]

London stocks gained 1.8% led by British Airways after the airliner upgraded its revenue expectations for the full-year through March by 4% from the earlier estimate of 3%.

Crude oil prices also gained $1 to $62 per barrel and gold prices gained $2.40 to $735 per ounce.

In London trading FTSE 100 rose 1.8% or 76.4 to 4,348.81.

Of the FTSE 100 index stocks 73 rose, 27 declined, and 2 were unchanged. British Airways led advancers in the index shares with a rise of 12.6% after forecasting that full-year revenue will jump 4%.

British Airways Operating Profit Drops to £140 million

British Airways reported today that the company''s operating profit dropped to £140 million in the first six months of the year ended September 30 from a profit of £493 million a year earlier. The company did not pay any dividend for the period.

Revenues gained 6.4% to £4.75 billion from £4.47 billion a year ago and the company anticipated full year fuel costs of £3 billion.

More than 12 million customers have traveled through the newly opened Terminal 5.

The passenger revenue soared 6.5% on capacity increase of 1.3% in the review period. Traffic volumes have been reduced, while the seat factor declined 3.8% to 74.6% but yields were up 10.5% on higher prices and the impact of stronger dollar.

In the cargo business volumes rose 2% from a year ago and revenues surged 25.2% to £363 million on higher fuel surcharge recoveries.

Fuel costs rose 52% from a year ago, despite fuel hedging profit of £329 million with fuel prices surging 73% from the comparable period a year ago.

British Airways now forecast that revenue for the full-year will climb 4% higher than earlier projection of 3%, while capital expenditure is expected to rise to £550 million for the year.

Fuel costs for the year are expected to remain unchanged at £3 billion.

U.S. Jobs Drop 240,000 in October

U.S. Bureau of Statistics reported on its Web site today that nonfarm payroll employment declined 240,000 in October and the unemployment rate increased from 6.1% to 6.5%.
In September employment dipped 284,000.

Employment has declined by 1.2 million in the first 10 months of 2008, with half of the drop experienced in the past three months.

In October the long-term unemployed soared by 249,000 to 2.3 million.

Gainers & Losers

British Airways led advancers in the FTSE 100 index shares with a rise of 12.6% followed by increases in Autonomy Corp. of 7%, in Lloyds TSB Group of 6.7%, in TUI Travel of 5.4%, and Shire Plc of 5.1%.

Energy stocks rose as crude oil prices gained by $1 to $62 per barrel. Tullow Oil rose 5.1% and BP climbed 4.5% on the news. Commodity prices also soared after gold prices increased $2.4 to $735 per ounce. Antofagasta increased 4.7%.

3i Group led decliners in the FTSE 100 index shares with a fall of 7.8% followed by losses in Petrofac Ltd. of 5.6%, in ICAP Plc of 5%, in Liberty International of 4.2%, and Carnival Plc of 3%.

Homebuilders fell on signs that lenders are reluctant to pass on the rate cut by the Bank of England. Land Securities fell 2.6% and Hammerson dropped 2.5%.

Europe Markets Review

In London FTSE 100 Index closed higher 114.73 or 2.69% to 4,387.14, in Paris CAC 40 Index increased 81.87 or 2.42% to close at 3,469.12 and in Frankfurt DAX index higher 124.89 or 2.59% to close at 4,938.46. In Zurich trading SMI increased 83.26 or 1.41% to close at 6,008.16.