Chairman’s overview
In this year British Airways faced a list of daunting challenges of its own. These included the need to: * Raise finance at a time of continuing crisis in the debt markets; * Radically reduce our historic cost base; * Change working practices; * Complete our planned merger with Iberia; * Win an acceptable anti-trust agreement to cooperate with American Airlines and Iberia on North Atlantic routes; and * Tackle our £3.7 billion pensions deficit successfully.
Twelve months on, we can feel satisfied that on every one of these issues, we have either tackled or made significant progress in overcoming the challenges we faced. Congratulations for all members of British Airways business.
We entered the recession strong financially and our fleet replacement plan fully funded by 2013. In August 2009, we have successfully raised L350 million through the issue of convertible bonds, providing us with finances to keep investing in our business and remain focused on quality of service, as the recession runs its course.

During this year we reduced our unit costs by 6.5%. Our fuel bill has dropped by nearly 600 million pounds, which is a big part of the decline. Another costs excluding fuel also declined by 1.8%. It was a truly great achievement. It is hard enough to cut costs while increasing capacity to do so, the sharp decline in capacity is very difficult. Our cost base is now much more competitive, which means that they are well prepared to achieve more profitable growth in the future.

We have successfully carried out the majority of our people with us in making changes to working practices, including our pilots and engineers. Number of employees left the Company freely. I would like thank those employees who stayed with us and those who left. Thank you for your help and getting involved in the challenges that helped make our company better.

We were able to make permanent cost reductions across the airline, including reducing crew complements. Unfortunately, these changes have been met by an unjustified strike by cabin crew branch unite. BASSA false position for its members, does not represent the views of the majority of cabin crew and is intent on confronting the airlines. The vast majority of our employees recognize the need for a permanent change and have a strong commitment to British Airways in this difficult year.

Our relationship with Iberia is very strong and we have now signed a merger agreement that will bring real