British Airways today warned its profits for 2009 would be hit by soaring fuel costs and a slowing economy, sending its shares down more than 4 per cent.

The company, which has already raised long haul fuel surcharges 11 times in less than four years, gave warning that fuel costs would rise £450 million, or about 20 per cent, to £2.5 billion in its next financial year.

Britain's flagship carrier also said it would be hit by costs related to the development of its new Terminal 5 building at Heathrow.

As a result, BA forecast an operating margin of about 7 per cent for the year ending March 2009, down from 10 per cent in the current year.

BA, like all its competitors, has been hit hard by the surge in oil prices and has been forced to pass those costs on to its customers by hiking the price of plane tickets.

The carrier last increased fuel surcharges last week with the levy for longhaul flights of more than nine hours increasing by £6, to £64 per flight from £58.

The prospect of further increases will do little to help the embattled carrier's reputation. It was voted the second worst airline in Europe for losing more bags and operating more delayed flights than any of its rivals.

The company's chief financial officer Keith Williams told shareholders at an investor day conference: “The outlook for the year is consistent with economic slowdown, the impact of increased fuel costs and one-off Terminal 5 transition costs.”

The company’s shares fell about 4.25 per cent to 253.75p a share. It also forecast that non-fuel costs were expected to rise by 3 per cent to 3.5 per cent. Total costs, excluding fuel, will increase by £200 million, BA said.

It said its revenues were expected to increase by 4 per cent to 4.5 per cent to £9.1billion next year, while capacity, measured by available seat kilometres, would rise by 2.4 per cent.

Meanwhile, talks aimed at averting an Easter strike by British Airways pilots are ongoing this week. The British Airline Pilots Association (Balpa) has said that BA pilots could take their first industrial action for 30 years, over claims that the airline's new subsidiary OpenSkies will drive down pay and conditions.

Last week, BA's reputation on the barometer of Britain's biggest brands fell six points last month to 45 out of 100 (50 means a customer goes out of his or her way to use or recommend the airline).

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