British Airways raises profit outlook

British Airways shares rose as much as 28 per cent on Friday after the flag carrier announced that it was raising its sales and profit outlook for the full year, helping to deflect the attention from its first-half loss.

Over the summer, BA said that it would introduce a one per cent reduction in capacity, meant to help it raise fares and, with cost cutting measures, return to profitability.

For the six month period ended 30 September, the airline reported a 49 million pound net loss, down from its net income of 493 million pounds for the same six months in the previous year. The carrier’s operating profits fell by 75 per cent, to 140 million pounds.

“The six-month period will be remembered as the bleakest on record,” said BA chief executive Willie Walsh, saying that high fuel costs and the crisis in the financial industry were responsible.

The airline’s sales increased by 3.4 per cent, reaching 4.75 billion pounds and exceeding analyst forecasts. Yields rose by 10.5 per cent, on a stronger US dollar and higher ticket prices.

Of all the news released, the carrier’s forecast was the biggest surprise.

BA changed its revenue growth forecast for the full year to four per cent from three per cent. The airline added that the one per cent reduction in capacity over the summer had helped maintain prices and a small measure of profitability, instead of the breakeven result it had predicted previously.

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