Oil prices fuel bill hike for BA

BRITISH Airways is expecting its annual fuel bill to rise by around 20 per cent, or around £450 million, overtaking staff costs as its biggest expense.

With oil currently touching record highs of $105 a barrel, Europe's third-biggest airline expects its annual bill this year to be around £2.1 billion.

And that, the carrier said, coupled with tougher economic times, would have an impact on profitability, with an operating margin of seven per cent likely in 2008/09, against expectations for ten per cent.

Finance director Keith Williams said: "The outlook for next year is consistent with economic slowdown, the impact of increased fuel costs and one-off Terminal 5 transition costs."

He added: "We're going into the downturn from a position of real financial strength."