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British Airways 'back in the game' after profit rebound

By Hilary Whiteman, CNN
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British Airways CEO: Business is better
  • BA beat analysts' forecasts with a pre-tax profit of $219M
  • Walsh says not seeing any sign of a double-dip recession in the UK
  • Slammed impending air passenger tax set to be introduced on Monday
  • Said increased taxes "increased taxes will drive away business"

London, England (CNN) -- The chief executive of British Airways declared the airline is "back in the game" Friday after returning to profit after two years of record losses.

The airline, which is seeking shareholder approval to merge with Spanish airline Iberia, says the combined group is catching up with rivals Lufthansa and Air France-KLM.

"I do see it though as us very much being back in the game, on a level-playing field competing with these two big European operators," Willie Walsh told CNN's Richard Quest.

BA beat analysts' forecasts with a pre-tax profit of £158 million ($219 million) for the six months to the end of September. During the same period last year it slumped to a loss of £292 million ($466 million) amid heavy discounting as it sought to fill seats.

"In fact, we gave thousands of business seats away particularly to small business to try to keep them in business through the depths of this recession," Walsh said. "Clearly we're hoping to see some opportunity now as the economic environment improves."

Clearly we're hoping to see some opportunity now as the economic environment improves
--Willie Walsh, British Airways CEO

Walsh said the airline was seeing no signs of a double-dip recession, backed by figures released in the UK this week that showed gross domestic product grew by 0.8 percent in the third quarter -- double analysts' forecasts.

He said the only risk of a return to the economic despair of last year is through collective despondency.

"I don't see anything that should jeopardize that recovery unless we talk ourselves into a recession and I think there's some evidence of that," Walsh said. "While the data supports the investment and recovery, people are holding back because they're unsure about the future."

The BA boss also hit out at the impending introduction in the UK of Air Passenger Duty (APD), a new tax on tickets which begins from Monday.

"[It's a] false economy," Walsh said. "I genuinely believe, as has been demonstrated in the Netherlands, that these increased taxes will drive away business."

The Netherlands scrapped its so-called "eco" tax last July after a commissioned report showed it would raise less money than it would cost the Dutch economy each year.

A number of other European countries are also raising taxes on passenger tickets as governments seek to earn extra revenue to reduce national deficits.