BA says business remains 'challenging'

British Airways has warned that trading conditions remain difficult and repeated that its full-year revenue will be lower.

The comments came as BA announced a rise in passenger traffic last month.

Traffic, measured in revenue passenger kilometres, rose by 2.8% compared with December 2001.

But BA remained cautious about the immediate outlook.

"The global economic environment continues to be difficult and as a result, trading conditions are challenging," the airline said in a statement.

"As previously forecast, revenue for the financial year will be down versus last year."

The prospect of military action against Iraq has hit air passenger numbers and airlines have also suffered from higher fuel prices.

But BA is currently undergoing a major restructuring which is seeing it make big cuts in capacity and jobs.

The cost cuts enabled it to report a big jump in profits for the first quarter of the financial year.

And BA's head of investor relations, George Stinnes, said the airline still expected to record a "modest " profit for the full year.