BA reports sharp fall in profits

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Chief executive Willie Walsh described the half-year period as "one of the bleakest on record", but said the airline produced a good performance given the difficult trading conditions.

Pre-tax profits of £52 million were down from £616 million a year earlier after fuel costs increased by £511 million to £1.49 billion.

BA said it hoped to make a "small profit" for the 2008/09 year, but warned that fuel costs for the full year were still expected to be about £3 billion.

While oil prices have fallen sharply in recent weeks, BA said this benefit was being offset by exchange rate movements and previous hedging contracts.

Revenues for the six months to September 30 were up 6.4%, despite a weakening in long-haul premium traffic since the summer. Operating profits fell to £140 million from £567 million a year earlier.

Mr Walsh added: "The six month period will be remembered as one of the bleakest on record. The period was hit by a crisis in the banking sector, record fuel prices and several airlines going out of business."

Meanwhile, Mr Walsh said a third runway for Heathrow was "critical" for the future of the UK economy. He said he was "absolutely convinced" of the need for the scheme despite speculation that official enthusiasm was waning.

Prime Minister Gordon Brown has said a final decision would be taken only after full consideration of the environmental implications. But Mr Walsh said in tough economic times an efficient international hub airport was "more important than it has ever been".

His comments came amid reports that Cabinet ministers have joined a Labour backbench revolt over expanding the airport, with the case for building a third runway challenged by figures showing a fall in flights this winter.