British Airways (BA) warned today that airlines were entering a downward cycle amid global economic weakness and high fuel costs.
Europe's third-largest airline said revenue was expected to rise by 4 to 4.5 per cent to more than £9.1 billion in the year to March 2009, but that operating margin would fall to around 7 per cent.
Fuel costs are expected to rise by about £450 million to £2.5 billion, an increase of 20 per cent. Non-fuel costs are expected to rise 3 to 3.5 per cent.
The airline said it would fall short of its long-held target of 10 per cent margins next year, but Chief Executive Willie Walsh said any downturn would also bring opportunities and that BA was still circling rival Bmi.
"We'll need to be ready to seize those opportunities . . . to move into the gaps created by the failure of our competitors," he told the airline's annual investor day.
"We're very interested in the future of Bmi. Anything that gives us the option to pursue further growth at Heathrow is interesting."