British Airways said today it would more than double fuel surcharges on long-haul flights to compensate for a leap in oil prices which it expects to add £225 million to fuel costs this year.
The warning came as the flag carrier posted a first-quarter profit above a consensus market forecast as demand for long-haul air travel recovers.
"The price of crude oil has soared and we now expect our fuel bill to be £225 million higher than last year," BA Chief Executive Mr Rod Eddington said in a statement.
BA Chief Executive Mr Rod Eddington
The airline said pretax profit for the three months to the end of June was £115 million, compared to a loss of £45 million a year ago.
BA posted a loss in the same period last year when ticket sales suffered due to the Iraq war, the SARS virus and sluggish economies around the world.
Mr Eddington said the carrier's biggest challenge was fuel and employee costs.
The airline faces a £133 million increase in pension contributions per year and potential strike action from ground staff over pay.
It said market conditions remained unchanged and reiterated its forecast of a 2-3 per cent increase in revenue in the current year to March 2005.
First-quarter revenue rose 5.1 per cent to £1.9 billion.
BA said it would raise its fuel surcharge on long-haul flights from £2.50 per sector to six pounds per sector. Short-haul charges are unchanged.
Benchmark US crude prices hit a record high on Friday, climbing close to $45 before easing back to $44.38.
Shares in BA, which fell last week on concerns about the growing cost of fuel, closed at £2.13 pence on Friday.