British Airways profits despite soaring fuel bill

BRITISH AIRWAYS posted strong quarterly profits yesterday but warned its annual fuel bill was likely to be £75 million (€108 million) more than previously thought.

It was good news for incoming chief executive Willie Walsh, but the company blamed the stronger US dollar for driving fuel costs up by around £525 million compared with the previous year.

The warning comes just a month after BA raised the surcharge on its long-haul flights by £8 to £24 to cover fuel costs.

But the airline eased concerns that the bomb blasts in London would dissuade travellers from taking to the skies or visiting Britain.

Passenger capacity in July was 2.4% higher than a year ago, setting a new record for the company, which is launching new long-haul routes after a gap of three years.

BA chairman Martin Broughton said: "Record passenger loads in July indicate that the short-term impact of the London bombings was not material, although it is too early to say what the long-term impact will be.

"When taken together with the uncertain economic outlook and volatility in both fuel prices and the US dollar exchange rate, accurate forecasting is even more of a challenge than usual."

Pre-tax profits for the three months to June 30 totalled £124 million - better than expected by analysts and driven by more customers flying in premium cabins.

Delivering his last set of quarterly results as chief executive before handing over to Mr Walsh, the former Aer Lingus boss, Rod Eddington said the group's operating margin stood at 8.5% - still shy of its long-term target of 10%.

The stronger dollar - combined with the fuel surcharges - was having a positive effect on revenues which BA said grow by up to 6.5% in the current financial year.

This was higher than the 4.5% to 5.5% growth predicted by BA when it last updated the market in June.