British Airways could pay first dividend in seven years

British Airways, Europe's third- largest airline, will probably meet its full-year profitability target, enabling it to pay out its first dividend in seven years, chief executive officer Willie Walsh said in an interview.

"We've made it clear that it's what we want to do, but it does depend on the performance,'' Walsh said. "Given we had a record first half, we're on track to deliver a 10 per cent operating margin and that would be the second trigger event ticked off.''

The target would be the widest full-year margin in the airline's history. The London-based company had a 12.5 per cent operating margin in the first half ended September 30. It last paid a dividend in 2001, before the September 11 attacks caused a slump in travel worldwide.

Bookings on the airline's long-haul premium class services remain "strong,'' Walsh said. The UK carrier plans to begin flights from continental Europe to the US in mid-2008, following the 'open skies'' air-services treaty between the US and European Union.

The carrier's "initial target'' is John F. Kennedy International Airport in New York, Walsh said. In Europe, it's considering "major European business cities'' including Paris, Frankfurt, Brussels and Milan.

There has been some "softening'' in leisure traffic from the US to Europe because of the dollar's decline, he said. Routes from London's Heathrow airport to Paris, Brussels and Amsterdam have lost business as customers turn to new, fast rail services with fewer travel constraints.

"That's the Heathrow hassle factor, because of the hand baggage restrictions,'' he said.

"Those restrictions will be lifted in January so it will be interesting to see if that gives us a bit of a bounce back. I think some of that shift to the train is permanent." ( Gulf )