British Airways beat forecasts with a 27 percent rise in annual profit announced today, raising forecasts for this year as higher ticket prices and demand for flights offsets soaring fuel costs.
The carrier, Europe's third-largest and headed by former Aer Lingus chief executive Willie Walsh, also said its short-haul business was profitable for the first time in a decade as it tackled competition from low-cost carriersby cutting ticket prices.
But it said fuel costs would rise further this year, as expected, and yields - or average passenger fares - would ease.
Operating profit for the year to March 31 rose to £705 million (€1.03 billion) from £556 million (4818 million) the previous year.
A recovery in first and business class traffic and new routes to India and China have helped BA keep planes full. BA has also improved its seat or load factor, with fuller planes as demand for air travel grows.
"These are good results, with revenue performance driven by improvements in seat factors and yield," Chief Executive Willie Walsh said in a statement.
BA predicted a 5-6 percent rise in revenue in the current year, up from a previous forecast of 4-5 percent, due to higher fuel surcharges and strong demand for flights. Some analysts had anticipated BA would raise its revenue guidance.
However, fuel costs are expected to rise 600 million pounds this year following a surge in oil prices. Non-fuel costs are expected to be unchanged.
BA, which is in negotiations with staff over measures to tackle its pension deficit, said its pension deficit at March 31 was £2.07 billion (€3.04 billion), up £101 million (€148.6 million) on the previous year.