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Good results impacted by disruption

BA Press Release 03/11/06

· Disruption costs £100 million

· Operating profit of £240 million before BA Connect write-down of £106
million

· Operating profit of £134 million

· Pre-tax profit of £176 million

· Revenue up 4.9 per cent

· Agreement in principle to sell BA Connect

British Airways today announced its second quarter results ended September
30, 2006 including a one-off write down of the group's investment in its
regional subsidiary BA Connect of £106 million.

This resulted in an operating profit of £134 million for the quarter
(2005: £261 million) and £345 million (2005: £437 million) for the half
year giving an operating margin of 5.8 per cent and 7.5 per cent
respectively. The pre-tax profit was £176 million for the three months
(2005: £241 million) and £371 million for the half year (2005: £365
million).

Excluding the BA Connect write-down, the operating profit for the quarter
was £240 million and £451 million for the half year giving an operating
margin of 10.4 per cent and 9.7 per cent respectively. The pre tax profit
was £282 million for the quarter and £477 million for the half year.

Willie Walsh, British Airways' chief executive, said: "Given the
significant impact of the security disruptions, estimated at a cost of some
£100 million, these are good results. Despite the extremely difficult
operational environment, we have delivered improved revenue.

"As part of our continued efforts to improve the profitability of shorthaul
we have today announced that we have reached agreement in principle to sell
the regional business of BA Connect to Flybe. Point to point regional
operations are not a strategic part of our business and we believe that
such activities are better undertaken by a regional low cost airline.*

"Our focus on costs is working and has helped offset the revenue impact of
recent weeks. Fuel costs in the quarter increased by nearly a third.
Underlying unit costs, excluding the BA Connect write-down and fuel, were
down 1.1 per cent. Costs will continue to be our focus as we work towards
achieving a 10 per cent operating margin.

"This is an exciting time for our customers with the rollout of our next
generation Club World flat bed later this month. We are also enhancing
ba.com to make it easier for our customers to book and get information
about their travel plans. It was an invaluable tool during the disruption
in August because it gave hundreds of thousands of our customers quick and
easy access to the very latest news.

"As we have previously announced we have taken the first steps in the
process towards expanding and renewing our fleet with the launch of a
competition between aircraft and engine manufacturers. However, we must
first tackle the £2.1 billion deficit in the New Airways Pension Scheme
(NAPS). Negotiations are progressing with the trustees and we continue to
consult with our trade unions.
I remain confident that we will resolve this issue."

Martin Broughton, British Airways' chairman, said: "Overall market
conditions are broadly unchanged. Longhaul premium transfer and shorthaul
premium traffic, although recovering, continue to be affected by the
tighter security arrangements currently in place. As a result, total
revenue is now expected to be 4.5 per cent to 5 per cent higher than last
year, down half a per cent from our previous guidance.

"We expect that total costs, excluding fuel, will be flat compared to last
year. Total fuel costs net of hedging for the year are expected to be some
£400 million higher than last year, based on current prices and sterling
dollar exchange rates."

"We welcome the governments announcement yesterday on the re-introduction
of liquids in cabin baggage which brings the UK into line with the rest of
the EU. We will continue to support the BAA as they work to improve the
customer experience across London's airports."

Group turnover for the second quarter was £2,313 million (2005: £2,205
million), 4.9 per cent up on a flying programme 1.5 per cent up, measured
in available tonne kilometres (ATKs). Traffic volumes, measured in revenue
passenger kilometres (RPKs), were up 3.6 per cent. Seat factor was up 0.1
points at 79.7 per cent on capacity 3.4 per cent higher in available seat
kilometres (ASKs). Yield measured in pence per RPK was up 2.2 per cent.

Reported unit costs increased by 10.5 per cent on the same period last
year. Unit costs excluding the BA Connect write down and fuel, were down
1.1 per cent on capacity 1.5 per cent higher in ATKs.

Fuel costs increased by 30.2 per cent to £534 million due to the increase
in fuel prices. Employee costs were up 1.4 per cent due to increased
pension costs partially offset by management headcount reductions.

Operating cashflow for the six months was £439 million (2005: £530
million). Including current interest bearing deposits, the cash position
at September 30, 2006 was £2,633 million, up £193 million compared with
March 31, 2006. Net debt was £1,125 million, down by £516 million since
the start of the year.

The board has decided that no interim dividend will be paid.

ends

November 3, 2006 111/KG/06

Note to Editors:
* See separate release on BA Connect.

Certain information included in these statements 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 Business Plan programs, 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 itemize 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 2006.

The estimated cost of the new security measures introduced in August
reflects the direct cost of the measures and the estimated revenue impacts,
both direct and indirect. The estimate of £100 million is based on
assumptions the company considers reasonable, but are judgemental.

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