SOARING fuel costs continued to cast a shadow over British Airways yesterday despite better than expected half-year results from the airline.

Cost-cutting measures and an improvement in passenger numbers helped drive the performance as profits in the six months to September 30 lifted to £335m from the £60m achieved in the wake of the Iraq war last year.

The company's debts fell to £3.3bn, their lowest level since 1993.

BA employs more than 1,000 people in the North-East, with about 800 at its Newcastle call centre.

Chief executive Rod Eddington said the figures showed BA was building a more robust airline, although he remained cautious about prospects, particularly as the company's markets remained sensitive to fare pressures.

The rise in BA's annual fuel bill, following record crude oil prices, will be £20m more than expected at £245m, with recent increases to passenger and cargo surcharges only recouping £160m.

Employee costs were identified as another area of concern after the progress achieved from 13,000 job cuts during the past two years was offset by recent wage awards and increased pension contributions.

In the six months to September 30, BA said fuel costs rose nearly 13 per cent to £529m, with staff costs up six per cent at £1.11bn. Total operating expenditure was broadly similar at £3.56bn after BA reduced selling costs by 16 per cent to £259m, including through the use of more online printed flight boarding cards.

As well as a rise in pension contributions of up to £133m a year, BA has been forced to the negotiating table with unions after baggage handlers and check-in staff threatened a 24-hour strike over the August Bank Holiday.

Brendan Gold, national secretary for civil aviation at the Transport and General Workers Union, said the latest results set a benchmark for future discussions with management.

He said: "In the light of higher profits and falling debt, staff will view critically any fresh proposals for cost savings in any areas."