British Airways’ profits take off

British Airways, Europe's second-biggest airline, said yesterday that annual operating profit rose 33 per cent after cost cuts and a recovery in business travel offset high fuel prices and lower fares.

The carrier reaffirmed forecasts for improved revenue growth in the current year but said its fuel costs would rise by 400 million ($1.05 billion), up from 300 million tipped previously, due to rising oil prices.

"For the year to March 2006, total revenue is expected to improve by 4-5 per cent, up from 3-4 per cent due to the impact of the latest fuel surcharges," chairman Martin Broughton said.

The carrier said operating profit for the year ended in March was 540 million compared with 405 million last year.

The result was well above the median of eight analyst forecasts of 506 million, according to a Reuters poll. British Airways had placed the consensus for operating profit at 518 million.

Pre-tax profit was 415 million compared with 230 million last year.

No dividend was declared but shares gained 1.8 per cent.

BA cut its external spending by 300 million during the year and used technology, including online bookings and self-service check-in, to improve efficiency.

But fuel and oil costs jumped 22 per cent for the year to 1.128 billion.

United States crude hit a record high of US$58.28 in early April.

BA and other airlines have been forced to introduce levies on ticket prices to help compensate for the increase.

Chief executive Rod Eddington has axed 13,000 jobs, simplified the airline's fleet and reduced debt during his tenure at BA.

Eddington is stepping down at the end of September and will be replaced by former Aer Lingus boss Willie Walsh, who joined the carrier last week.

* Thai Airways International, Thailand's biggest airline, said its quarterly profit fell for the third time in four quarters, blaming fewer passengers after tsunamis struck Southeast Asia and rising fuel prices.

Net income fell 34 per cent to 3.49 billion baht (122.91 million) in the second quarter ended March, from 5.26 billion baht last year, the Bangkok-based airline said yesterday.

Thai Air this month raised its fuel surcharge by as much as 50 per cent to $15 for flights within Asia, its biggest market, from $10 to cover rising oil prices.

Fuel costs rose to 8.95 billion baht, or 26 per cent of operating expenses, from 7.36 billion baht a year earlier.

The carrier reduced flights as overseas tourists avoided resorts on the Andaman Sea after the tsunamis.

- REUTERS , BLOOMBERG