BRITISH AIRWAYS today reported a sharp fall in profits, after the airline was hit by rising fuel costs and the impact of the economic crisis.

Chief executive Willie Walsh described the half-year period as `one of the bleakest on record', but said the airline produced a good performance given the difficult trading conditions.

Pre-tax profits of £52m were down from £616m a year earlier, after fuel costs increased by £511m to £1.49bn.

BA, which ran its last Manchester-New York service last weekend, said it hoped to make a `small profit' for the 2008-09 year, but warned that fuel costs for the full year were still expected to be about £3bn.

While oil prices have fallen sharply in recent weeks, BA said this benefit was being offset by exchange rate movements and previous hedging contracts. Revenues for the six months to September 30 were up 6.4 per cent, despite a weakening in long-haul premium traffic since the summer. Operating profits fell to £140m from £567m a year earlier.

Mr Walsh added: "The six-month period will be remembered as one of the bleakest on record."

Mr Walsh said that BA, which has already reduced the number of flights it will make this winter, was planning to reduce capacity by about one per cent for the summer 2009 schedule, which runs from the end of March to the end of October.

BA has suspended four services from its summer 2009 schedule - Heathrow services to Dhaka in Bangladesh and to Kolkata (Calcutta) and Gatwick flights to Dublin and Zurich.

Asked if there would be further capacity reductions in this period, Mr Walsh said that it depended what happened within the industry.

Earlier this week Ryanair boss Michael O'Leary predicted that eventually just four European carriers would remain - BA, Air France, Luft-hansa and Ryanair.

Mr Walsh said today: "I agree that there will be fewer airlines, although I think there will be more than four."