BRITISH AIRWAYS has signalled business is stabilising, eclipsing news of a worse than expected first-half loss and a prediction that revenue will slump by £1 billion (€1.12 billion) this year.

Shares in the company jumped as much as 8 per cent, making it the biggest gainer on the FTSE 100, as the company also said revenue from business travellers was back at pre-credit crunch levels by one industry measure.

“The market was fearing something worse but BA’s tone was more optimistic than it has been – it can see light at the end of the tunnel now,” said Evolution analyst Nick Cunningham.

BA, whose alliance with American Airlines and Spain’s Iberia is being scrutinised by European and US competition watchdogs, yesterday reported a pretax loss for the six months to the end of September of £292 million, while revenues fell 13.7 per cent to £4.1 billion.

The airline, which has reduced operating costs by 8.7 per cent, said it would slash more costs, with another 1,200 staff losing their jobs next year, taking the number of job losses to 4,900.

“Our revenues are likely to be about £1 billion lower this year so we’re determined to reduce costs further to ensure we return to acceptable levels of profitability,” BA chief executive Willie Walsh said, adding that it was “riding along the bottom” of the downturn.

BA reported better traffic data, with all-important premium, or business class, traffic down 1.4 per cent in October year-on-year, a vast improvement on September’s 7.9 per cent decline.

It also said premium yields – the revenue it makes on each business-class passenger for every mile travelled – had returned to pre-credit crunch levels over the past three months.

The airline’s loss compares with a first-half pretax profit of £52 million last year. – (Reuters)