British Airways, Europe's second-largest airline, raised its earnings guidance today after reporting a 36% rise in first-quarter earnings profits, helped by growth in first and business class travel.
The airline said it expected year revenues to be higher than previously forecast due to favourable exchange rates and increased fuel surcharges, but market conditions remained unchanged.
'The continuing strength of the US dollar and increased surcharges have improved the revenue outlook. We now expect total revenue for the year to March 2006 to grow by 5.5-6.5%,' BA Chairman Martin Broughton said in a statement.
The airline said operating profit for the three months to June 30 was £176m sterling compared to £129m a year ago. The result was higher than consensus forecasts of £141m.
Forecasts had ranged from £103-160m. BA had flagged a consensus number of £145m. BA had previously been guiding for a 4.5-5.5% increase in revenues for the current year to end-March 2006.
BA has been slashing costs, raising fuel surcharges and increasing its number of premium - or first and business class - passengers to offset record oil prices and stiff competition. It expects fuel costs to be £525m higher this year than a year ago.
The airline reported strong passenger figures for July, which Broughton said indicated the short-term impact of the London bombings was not material.
BA Chief Executive Rod Eddington steps down at the end of September to return to his native Australia and will be replaced by former Aer Lingus boss Willie Walsh.
