BRITISH Airways (BA) yesterday reported a 30 per cent rise to record profits, triggering big bonus payments to staff, but kept investors guessing on talk of a link up with American Airlines.

BA reported underlying pre tax profits of £585 million sterling in the year to March 31st and said it would pay £94 million in bonuses to staff under a profit sharing scheme.

The airline said its network of alliances including USAir and Australian carrier, Qantas, contributed £150 million to group operating profits, which rose 17.8 per cent to £728 million.

However, the chief executive, Mr Robert Ayling, refused to be drawn on intense market speculation that BA was on the brink of forging a new alliance with AMR Corp's American Airlines. "We don't say whether or not we have talked to anyone in particular but I enjoy all the speculation," Mr Ayling said in an interview.

There has been speculation that BA might be planning to team up with American to either strengthen or replace its investment in the struggling US east coast airline USAir Group.

But Mr Ayling said the operational benefits of its alliance with USAir continued to contribute in the region of £70 million pounds a year to BA's profits.

BA was reviewing its European short haul operations, Mr Ayling said. He did not rule out the possibility of BA operating fewer of its own aircraft and moving more of its regional market into the hands of franchised operators to bring down costs.

There has also been speculation about a link up with KLM Royal Dutch Airlines NV.