British Airways has reported a £3 million rise in operating profits in the last three months despite battling against a massive increase in fuel costs.

The airline said operating profits for the three months to June 30 were £97 million against £94 million in the same period last year, despite fuel prices rising by 70 per cent.

The figures come three months after BA reported a massive slump in full-year profits after what it described as its "most difficult year" since it was privatised in 1987.

BA said the results reflected an improved mix of premium passengers on its planes and higher average fares.

However, the airline dropped £50 million into the red after taking into account £58 million of losses on sale of businesses, mainly relating to the sale of its French subsidiary Air Liberte.

This figure compared to a £200 million profit for the same period last time, which had been boosted by £177 million of one-off profits.

Chief executive Rod Eddington said the figures showed promising signs but the airline still had "a long way to go".

Mr Eddington added: "These results reflect the scale of the challenge we face in a highly-competitive and price-sensitive market.

"The growth in premium traffic has been strong and yields throughout the airline are up."

The company, which has faced fierce competition from rival airlines, saw its profits reduced by higher fuel prices and restructuring costs.

Since it reported its last set of results, it has also announced it is in talks regarding an alliance with Dutch airline KLM.

These talks are still ongoing, but Mr Eddington said the discussions could take "some time" as regulatory issues had to be looked into.

Mr Eddington also commented on the effect on BA of the Concorde crash outside Paris last month involving an Air France plane, which killed 113 people.

BA has seven Concordes and Mr Eddington described the accident as "particularly close to home" for the company.

But he said: "I don't think it will have a substantial impact on our Concorde business. We have a lot of dedicated and loyal Concorde customers."