BA Q1 profits up 20 pct on fuller planes, demand

LONDON, Aug 4 (Reuters) British Airways, Europe's third-largest airline, said on Friday first-quarter earnings rose 20 percent as expected thanks to fuller planes and demand for business-class travel.

BA also tipped full-year revenues to rise 6 to 7 percent, up from its previous guidance of 5 to 6 percent, but said costs excluding fuel would be higher due to staff pension costs.

''It was broadly in line (with expectations). Revenues were better but costs were worse. There was good and bad news but both were expected,'' Oriel Securities analyst Gerald Khoo said.

Operating profit for the three months to June 30 was 211 million pounds (5.1 million) compared to 176 million pounds a year ago.

Analysts' consensus forecasts were for profits of 213 million pounds in a wide range of 193 million to 267 million pounds, according to figures provided by the company.

''These are good results driven by strong revenue as a result of record seat factors and better cabin mix,'' Chief Executive Willie Walsh said in a statement.

A recovery in first and business class traffic, new routes to India and China and demand for trans-Atlantic flights have helped BA offset record fuel prices.

The airline said it still expected fuel costs to be 550 million to 600 million pounds more than last year, in line with earlier guidance.

However, increased pension contributions pushed up employee costs in the quarter by 7 percent. BA said costs excluding fuel would be slightly higher instead of flat as previously predicted.

It also said July passenger traffic rose 4.4 percent and its load factor -- a measure of how well it is filling planes -- was 82.3 percent in the month.

The airline said capacity growth for the first half was expected to be about 4 percent but would slow later in the year for a full-year rise of 2.5-3 percent.

BA said last month it was helping Britain's Office of Fair Trading and the U.S. Department of Justice with an investigation into alleged cartel activity over airfares and fuel charges.

REUTERS CS PM1342