Surcharges have helped to offset rising fuel costs

Pre-tax profits jumped to �220m ($408m) - up from �105m in the same quarter last year - pushing profits for the first half of the year up to �335m.

BA shares ended the day down 5.5 pence, or 2.45%, at 219p.

Analysts expressed concern about a fall in passenger yields and management's cautious outlook on future trading.

The airline said that fuel costs were 12% up on last year and pushed its annual fuel bill estimate �20m higher to �245m.

However, fuel surcharges, which the airline introduced earlier this year to offset rising energy costs, are expected to raise �160m.

Tighter cost measures and higher passenger numbers helped operating profits rise 23% to �240m during the quarter.

Cutting the fat?

Analysts Panmure Gordon said BA had a firm grip on costs but questioned what further cuts it could make.

Rising fuel costs are expected to continue and remain a challenge along with employee costs Rod Eddington, BA chief executive Check BA's share price

"The low hanging fruit is gone and further substantial cost reductions are becoming increasingly difficult to implement," the firm said.

"With no significant improvement expected in market conditions, we believe that BA will increasingly struggle to offset revenue and cost pressures."

BA chief executive Rod Eddington said the airline was on the right track.

"We are making steady progress in building a more robust airline," he said. "Rising fuel costs, however, are expected to continue and remain a challenge along with employee costs."

The company's net debt figure of �3.3bn was now the lowest it has been since 1993, he added.

Passenger traffic rose in October

Despite the improvement, the airline said it would not be issuing a half-year dividend.

Turnover rose 2.2% in the second quarter to �2.03bn.

Employee costs rose by 7.7%, as increased pension contributions and wage awards more than offset savings from job cuts.

BA has slashed its staff numbers by more than 13,000 as part of a Future Size and Shape strategy unveiled by Mr Eddington following the September 11 attacks.

Jump in online bookings

BA also released passenger figures for October, which showed traffic, measured by revenue per passenger kilometres, was up 1.8% on a year ago.

Our focus will remain on reducing costs and debt Martin Broughton, BA chairman

The airline's load factor - the number of seats filled - was up to 74.2% from 73% last year.

BA said its online booking service was becoming more popular, with a quarter of its passengers opting to book online. Booking revenue from ba.com was up 42% on last year.

The introduction of online printed flight boarding cards - now accepted at 31 airports in the UK and Europe - had helped drive down selling costs by 17.6%.

"Market conditions have remained broadly unchanged since our last report," said chairman Martin Broughton.

"All market segments remain price sensitive and yield declines are expected to continue."

"Consequently, our focus will remain on reducing both controllable costs and debt," he said.