In July 2010 traffic, measured in Revenue Passenger Kilometres, fell by 2.6 per cent. Passenger capacity, measured in Available Seat Kilometres, was down 1.9 per cent on July 2009. This resulted in a passenger load factor decrease of 0.6 points versus last year, to 84.0 per cent. Traffic comprised a 0.8 per cent increase in premium traffic and a 3.2 per cent decrease in non-premium traffic.

Cargo, measured in Cargo Tonne Kilometres, rose by 3.3 per cent.

Market conditions

Underlying market conditions are as we outlined in the Interim Management Statement and investor presentation of July 30, 2010. For the summer overall volumes are likely to be slightly lower than the peak levels seen last year with a lower proportion of transfer traffic and strong yield performance in both premium and non-premium. In the winter yield growth is likely to slow due to capacity increases and the stronger base.

The European Union approved the planned merger between British Airways and Iberia without applying any conditions. The airlines received regulatory approval from the US authorities in June. These approvals are another important step towards the completion of the merger which is scheduled to take place by the end of 2010.

British Airways, American Airlines and Iberia received final regulatory approval from both the European Commission and the US Department of Transportation thus allowing the three airlines to enter into a joint business agreement on transatlantic flights.

During the month the UK Pensions Regulator approved the recovery plans to address the pension deficits in the Airways Pension Scheme and New Airways Pension Scheme. These recovery plans avoid closing the pension schemes and maintain BA’s annual contributions at the current level of some £330 million, plus agreed annual increases in line with inflation expectations averaging three per cent.

British Airways became the first UK airline to take delivery of the long range Boeing 777-300ER.The state-of-the art aircraft is bigger, quieter and more fuel efficient than its predecessors and showcases the future face of British Airways.  It features an all-new interior including new World Traveller and new World Traveller Plus cabins and a new in-flight entertainment system.