The on-going industrial disputes with ground staff and cabin crews has cost British Airways £15 million sterling so far. By the half year stage the bill could hit £125 million, the company revealed yesterday.

Lost revenue and contingency measures for the three day strike by stewards and stewardesses in July formed the bulk of the total. The firm's profits also suffered from a £77 million hit at the hands of sterling's strengthening.

However, a £130 million gain on the sale of its stake in US Airways lifted the headline pre-tax figure for the three months to the end of June by 46.7 per cent to a record £220 million, against £150 million for the same period last year.

As well as the potential dispute costs in the second quarter, BA said it also faced further pressure from the pound which will negate some of the £50 million profit expected on the sale of shares in global computer reservations system, Galileo International.

Operating profit fell £55 million to £140 million, due to the effects of the strong pound, without which the figure would have risen 5.6 per cent.

However, without the pound and staff traumas, BA pulled together a strong performance in the quarter, with group turnover up 5.4 per cent to £2.2 billion and total passenger numbers up by 10.5 per cent to 10.6 million in the first three months.

Chairman Sir Colin Marshall said: "The airline's over-riding priority for the coming weeks is to restore the confidence of its customers and to go on demonstrating the pride we have in our employees.

"Plans to explain fully to all of them the way in which we intend to grow our business in a fiercely competitive market, and the vital role they have to play in doing that, are now being developed."

Earnings per share for the period worked out at 16.3p against the 11.9p seen in 1996.

Fuel costs were up £3 million to £204 million, with cargo revenue 4.2 per cent higher at £150 million.

BA said its business efficiency programme was "on track" and well on the way to making the £1 billion a year savings it needs to finance a three-year £6 billion investment plan.

The pay roll rose during the period, 3.8 per cent higher at £572 million due to an extra 2,200 working for the group than a year ago.

BA staff now hold the third highest stake in the company after it handed out 10 free shares to all employees to mark the tenth anniversary of its privatisation.

Over 80 per cent of the workforce - 48,000 people worldwide - are now shareholders.