British Airways (BA) is hopeful that it can deal with an unstable year ahead by giving its first dividend since 2001 and increasing profits 45 per cent as it said the fuel costs are likely to go up GBP1 bn pounds.

BA shares which have seen a downfall of 12 per cent in the past fortnight, gained 8 per cent.

The company said it was checking its size, costs and network or routes against the conditions of financial pressures and record-high levels of fuel price. It also said that the revenue generation in this fiscal was likely to lesser than its earlier forecasts. The group, however, said the results for the fiscal ended 31st March showed it was up to the mark.

Pretax profit increased to GBP 883 million, the company achieved its operating margin mark of ten percent and declared a dividend of five percent.

In its outlook statement, BA said, "The first quarter will be particularly difficult (...and) the full year will also be challenging. As a result, we have reduced capital expenditure and are reviewing our capacity, costs and network".

The company reiterated that it continued to be in talks with both American Airlines and Continental Airlines in order to find out promising opportunities to work together. it also claimed that it had sorted out issues at London Heathrow's Terminal 5.

It said, "Despite the difficulties of the opening of Terminal 5 in the first few days, it is now working well, and some 2 million passengers have gone through it".