British Airways (BA) yesterday announced its best first-quarter profits for eight years, benefiting from the rising volume of long-haul passengers in its lucrative business-class cabins.

EasyJet, the UK low-cost carrier, also raised its full-year profits guidance, strengthening investor confidence in the improving fortunes of the European airline sector.

BA increased pretax profits in the three months to June 30th from £75 million ($133 million) to £124 million, ahead of market expectations, and its latest traffic data showed that the strong upward trend was continuing during the summer.

Overall traffic in July rose 4.2 per cent, but its premium traffic - passengers travelling in business and first class - grew 6.9 per cent year-on-year following a rise of 8.6 per cent in June.

Sir Rod Eddington, the outgoing BA chief executive who retires at the end of September, said the airline had achieved its best first-quarter result since 1996/97 in spite of high fuel costs.

Average fare levels, excluding fuel surcharges on ticket prices, rose 1.5 per cent thanks to the rise in premium traffic, the first quarterly increase in yields since the airline industry plunged into recession in the wake of the September 11th, 2001 terrorist attacks in the US.

BA and EasyJet, two of the biggest airlines in the London market, said last month's bomb attacks had not yet had a material impact on their businesses.

Sir Rod said the group's record passenger loads in July showed the bombings had not had a material impact in the short term but said it was too early to say what the long-term effect would be.

Ray Webster, EasyJet chief executive, who is also scheduled to retire as soon as a successor is appointed, said the bombings had affected demand for inbound travel to London but were not expected to hit the group's yearly results.

EasyJet warned in May that rising fuel costs caused by the record oil price would mean a drop in profits for its financial year to the end of September.

But yesterday Mr Webster revised the guidance on the strength of the group's improving revenues and said reported pre-tax profits should now be "broadly in line with last year". BA shares closed 4½p or 1.6 per cent lower at 286p down from Thursday's 12-month high of 290½p.

EasyJet share price rose 5.7 per cent to close at 265¼p near its 12-month high of 268¾p reached two weeks ago. - (Financial Times Service)