BA shrugs off fuel price hike to post profit

BRITISH Airways and merger partner Iberia yesterday defied a 35 per cent jump in fuel costs to post combined half-year profits of €39 million (£34.2m).

International Airlines Group, which was formed in January, has benefited from improved demand on long-haul routes, particularly for premium seats, as well as ongoing cost-cutting measures.

Its fuel bill surged to €2.44bn, of which only half was recovered through initiatives such as fuel surcharges. The airline's profit compared with a loss of €419m a year earlier.

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Former BA boss Willie Walsh, who is chief executive of the combined group, said he expected "significant growth" in profits across 2011, despite strong competition on short-haul routes. He also expects events in Japan, North Africa and the Middle East to knock profits by up to €100m.

He added: "Against a background of economic uncertainty, London remains a strong market."

BA and Spain's Iberia have retained their brands in the merger, which is expected to save €400m a year by its fifth year.

It is now the third-largest scheduled airline group in Europe and the sixth largest in the world, based on revenues.