British Airways, beset by market rumours that a fresh profit warning is imminent, hiked its fuel surcharges yesterday in response to the rising cost of oil.

From Friday the surcharge will rise by £30 to £158 for return long-haul trips longer than nine hours. A £20 increase will be imposed on long-haul flights under nine hours, taking the cost to £126. The levy on return short-haul flights rises £6 to £26. It is the 10th rise since BA introduced its first fuel levy in 2004, when oil cost $40 a barrel and the fee was £5 for a return flight. Oil now costs nearly $120 a barrel.


BA shares closed near their recent year-low at 221p yesterday amid widespread speculation that it will issue its second profit warning of 2008 next month. BA warned last month that a global downturn in the airline market was under way as it said profit margins would be 7% in 2009, down from an expected 10% in 2008.

Analysts expect BA to miss that target, which presumed that oil would average $85 a barrel over the financial year. The Terminal 5 fiasco is also expected to cost the airline more than the £16m it forecast. Andrew Fitchie, a Collins Stewart analyst, believes BA's margin will be 4% this year. "The whole industry is uneconomic at this oil price level," he said.