BA pressured to reveal fuel costs

BRITISH Airways is under increasing pressure to reveal the true cost of its fuel bill as oil prices continue to soar.

Leading City analyst Lars Slomka claims BA will have to spend £261m more than it did last year buying jet fuel.

BA reckons the additional costs will be £225m. But it disclosed that figure in early August and oil has risen 22% since then.

At the same time it is only recouping £80m from its ever-increasing fuel surcharges, despite raising them for the second time in as many months last week. Passengers will have to pay a £20 excess on flights to the US and Asia, up from £12.

Slomka estimates that a $1 increase in the price of oil costs BA £24m. On that basis, the rise since August alone is worth £230m.

But BA is sticking to its earlier £225m forecast. Spokesman George Stinnes said no announcements were planned but that the guidance was constantly under review.

He admitted the surcharge rise will not cover the increase: 'It will not come close to covering the higher costs of oil.'

BA has not increased the amount of oil it has bought in advance, with 72% bought through to March.

The increase and the recent sale of its stake in Qantas will hit BA's earnings per share, with Slomka forecasting 16.3p in the year to March against an earlier 19.5p estimate.

He also slashed his target price on the shares from 320p to 295p.

The news follows the appointment of lawyer Denise Kingsmill, former deputy chairman of the Competition Commission, as a non-executive director.

Kingsmill is expected to be the first of four appointments being handled by Anna Mann.

Baroness O'Cathain is stepping down. Dr Ashok Ganguly and Lord Renwick are not expected to seek re-election next year after nine years on the board.

Europe's biggest discount airline, Ryanair, has said it will not impose a fuel surcharge.

But several airlines, including BA, are planning to increase their fuel surcharges this week. Virgin Atlantic intends to bring in another rise on Thursday because of the continuing increase in the price of oil, while German carrier Lufthansa will follow on Friday. It plans to put up its levy by €5 (£3.34) on domestic and European flights and by €10 on long-haul routes.