British Airways beat forecasts with higher second-quarter earnings today and slightly raised its revenue forecast following a recovery in first-class leisure travel and higher ticket prices.
But shares in Europe's third-largest airline fell after it failed to impress a market that had already been expecting a solid result, despite high fuel bills and a strike at London's Heathrow airport that cost up to £45 million.
"With a weakening hedging profile, fuel costs will continue rising, and a slowing pace of saving on other costs will likely keep a lid on expectations for profitability," Morgan Stanley said in a note.
BA shares fell 1.8 per cent to 308 pence today. The stock has risen 9 per cent in the past week and is not far from a 12-month high.
BA said operating profit for the three months to end-September was £261 million, compared with £245 million a year ago.
The carrier said it expected revenue to rise 6 to 7 per cent this year -
up from 5.5 to 6.5 per cent forecast previously - making it the third time BA has raised its sales forecast since February this year.