British Airways, Europe's second-largest airline, raised its earnings guidance today after reporting a 36 percent rise in first-quarter profits, helped by growth in first- and business-class travel.
Despite soaring oil prices, the airline said it expected year revenues to be higher than previously forecast due to favourable exchange rates, increased fuel surcharges and more demand for premium travel.
"They are pretty good numbers, that is clear. As we saw with Ryanair, the leading players in Europe, the yield and revenue situation is improving at a faster rate than the fuel cost increase," BNP Paribas analyst Nick van den Brul said.
The airline said operating profit for the three months to June 30 was 176 million pounds, compared with £129 million Stg a year ago.
The result was above consensus forecasts of £141 million, according to a poll of six analysts by Reuters. Forecasts had ranged from £103 million to £160 million. BA had flagged a consensus forecast of £145 million pounds.
BA shares were trading 0.5 percent higher at 292 pence at 0818 BST, having touched 299p.
"The continuing strength of the US dollar and increased surcharges have improved the revenue outlook. We now expect total revenue for the year to March 2006 to grow by 5.5-6.5 percent," BA Chairman Martin Broughton said in a statement.
BA had previously been guiding for an increase of 4.5 to 5.5 percent in revenues for the year to end-March 2006.
The airline has been slashing costs, raising fuel surcharges and increasing its number of premium - or first- and business-class - passengers to offset record oil prices and stiff competition.
Finance Director John Rishton told reporters on a conference call it now expected fuel costs to be £525 million more this year than a year ago. The airline was previously guiding £450 million for fuel this year.
BA reported strong passenger figures for July, which it said indicated the short-term impact of the London bombings in July was not material.
BA Chief Executive Rod Eddington steps down at the end of September to return to his native Australia and will be replaced by former Aer Lingus boss Willie Walsh.