BA shares take flight after historic loss

Shares in British Airways jumped more than 5% as the City decided the very worst could be over for the airline.

As expected, BA recorded a first-quarter loss for the first time in its history reporting a swing from operating profits of £34 million to losses of £100 million in the three months to end-June. Underlying revenues dropped 17%.

The carrier's chief executive Willie Walsh said: "The industry continues to face very difficult trading conditions with considerable uncertainty over the likely timeframe of the recovery from the global economic downturn."

BA's losses come in the same week that Air France-KLM. Lufthansa and Singapore Airlines reported huge losses but low-cost carriers Ryanair and easyJet remained in profit. Walsh said: "Underlying volumes and seat factors have stabilised during the first quarter and are expected to improve in the peak summer months.

"Yields will be under pressure from the year-on-year impact of lower fuel surcharges, exchange movements and the mix of business and leisure passengers. Yield uncertainty continues to make revenue forecasting difficult."

But analysts welcomed the stabilisation and potential upturn.

BA is raising £680 million from the City and today announced that it will cut capital spending by a fifth this year from £725 million to £580million largely by delaying new aircraft deliveries.

Walsh said he still wants to merge with Spanish airline Iberia and had recently held a "constructive meeting" with its new management.