British Airways has posted a better-than-expected annual operating profit and said revenues should improve by 2 to 3 per cent this year.
The carrier reported a 37.3 per cent rise in operating profit to £405 million sterling for the year to the end of March.
Sales fell 1.7 per cent to £7.56 billion despite a slight boost in capacity. BA and its rivals, particularly the no-frills carriers, in Europe have been fighting a fares war.
BA has undertaken the most radical restructuring among its European peers, slashing about 13,000 jobs, simplifying its fleet, cutting unprofitable short-haul routes and adopting the online ticketing tactics used by its no-frills rivals.
Europe's second-biggest airline said it expected fuel costs, which account for 11 per cent of operating costs, to be £150 million sterling higher in the year to March 2005 than last year. The price of oil has surged to record levels.
Shares in BA last traded at 246-3/4 pence. The stock has underperformed the FTSE 100 Index by 23 per cent in the past three months as investors fretted over high fuel prices.