British Airways has shrugged off the £125m cost of last year's bitter flight attendants' strike and the effect of the strong pound to surprise the City with better than expected profits.

Pre-tax profits came in ahead of expectations at £580m for last year, but were down from £640m in the previous year. Turnover was up from £8.4bn to £8.6bn.

A bitter staff dispute cost BA £125m

The company said its figures had been hit by the strength of the pound, which sliced into profits by £200m, and last summer's industrial dispute.

However BA said passenger numbers for the main airline were up 4%, and added that the outlook for the future was favourable.

A company spokesman said: "The airline remains well positioned in a world industry that continues to offer substantial passenger and cargo growth.

"There is good growth in European markets. Fuel prices have fallen and sterling is dropping back from its recent peaks. This economic outlook will help offset the impact of any slowdown in the U.S. and UK domestic economies and the current difficulties in the Far East."

An efficiency drive has also helped to reap savings of £250m.

American alliance

Meanwhile BA's chief executive Robert Ayling is confident the finishing line is in sight for the company's bid to get regulatory approval for its long delayed alliance with American Airlines.

The main hold-up to the deal getting approved in Europe and the US is over the number of take-off and landing slots the two airlines might be prepared to give up at London Heathrow to give rivals room to compete at the world's busiest international airport.

However Mr Ayling said: "We believe we are in the final straight now of the regulatory process in London, Washington and Brussels.

"I remain hopeful that the alliance will be approved in a way that keeps the regulators happy and satisfies our commercial objectives."

BA is also looking to make alliances with other airlines in Asia.

A company spokesman said: "Opportunities to build relationships with other airlines in the Asia Pacific region continue to be explored."
 

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