Shares in British Airways fell yesterday as concerns over rising fuel prices overshadowed a 4.2 per cent increase in June passenger traffic for Europe's second-biggest airline.

Airlines around the world are recovering from last year's woes, when they suffered from the effects of the Iraq war, the SARS virus and a global economic downturn.

BA said its June passenger load factor, an indication of how many seats the plane has filled on its flights, rose 0.5 percentage points to 77.7 per cent from June a year ago.

However, rising fuel costs have cast a shadow over the sector as political tension in the Middle East keeps oil prices near record highs.

Investors said year-on-year comparisons were getting tougher for airlines such as BA.

Although BA's passenger numbers were up from June 2003, they were below May's increase of 11 per cent.

"Fuel costs remain a concern at this level," said Oriel Securities analyst Gerald Khoo.

BA's rise in June passenger traffic also came in below some market forecasts. - (Reuters)