British Airways Posts 88% Fall in Pretax Profit

British Airways posted a fall of 88 percent in first quarter profit and said the trading environment was the worst the industry has ever faced as high oil prices, the economic slowdown and weak consumer confidence hit.

The British carrier reduced its annual revenue target to 3 percent from 4 percent previously and said it would raise ticket prices during the year to recoup losses from a planned 3 percent reduction in winter capacity.

"This is the worst trading environment the industry has ever faced and fares are likely to go up as we reduce some winter capacity and cope with unprecedented oil prices but we won't be grounding any aircraft," CEO Willie Walsh told reporters on a conference call.

Profit before tax for the three months to end-June fell to 37 million pounds from 298 million pounds in Q1 last year, missing an average forecast of 49 million pounds supplied by BA.

Analysts' forecasts for pretax profit ranged from 16 million pounds to 87 million.

The group's operating profit fell to 35 million pounds from 255 million during the same period last year but revenue rose 2.8 percent to 2.26 billion.

Walsh confirmed talks with Spanish carrier Iberia about a potential all-share merger are underway but said it was "too early to say what impact it will have on the business in terms of jobs."