British Airways beat forecasts after higher ticket prices and demand for business-class flights offset soaring fuel costs to deliver a 27 percent rise in annual profits, sending its shares higher.
Europe's third-largest carrier also said on Friday its short-haul business was profitable for the first time in a decade and raised its revenue forecasts for this year due to extra income from higher passenger fuel surcharges.
Operating profit for the year to March 31 rose to 705 million pounds ($1.33 billion) from 556 million pounds the previous year.
This beat the average market forecast of 695 million pounds from 15 analysts surveyed by Reuters Estimates.
A recovery in first and business class traffic and new routes to India and China have helped BA keep planes full, while demand for trans-Atlantic flights was strong.
BA also improved its seat or load factor, with fuller planes as demand for air travel grows. However, it said fuel costs would rise a further 600 million pounds this year to 2.2 billion pounds, as expected, and yields - or average passenger fares - would ease.
BA is predicting a 5-6 percent rise in revenue in the current year, up from a previous forecast of 4-5 percent. "The outlook was largely as expected as we already knew the fuel surcharge had been put up," Oriel Securities analyst Gerald Khoo said.
Chief Executive Willie Walsh said the company would continue to focus on cutting costs other than fuel and was confident of avoiding a repeat of last summer's strikes as it negotiates measures to tackle its pension deficit with staff.
"There is nothing on our agenda to signal there will be any difficulties this summer," Walsh told reporters on a conference call. "We are going to tackle all aspects of the cost base where we can."
While BA paid staff a 48 million pound bonus, triggered by achieving an 8.3 percent operation margin, unions said it did not resolve concerns about pensions and a move to a new terminal at Heathrow.