Kevin O'Toole/LONDON

BRITISH AIRWAYS impressed analysts with record profits in the June quarter, while KLM followed with another robust performance, helping to underline the strength of demand in Europe's air markets.

BA's net profits rose above £100 million ($160 million) for the quarter, the first in its financial year, easily outstripping analysts' expectations.

Behind the figures lies a growth in passenger traffic of nearly 12%, led by long-haul services. Chairman Sir Colin Marshall adds that premium passenger demand also continued its recovery, especially on the re-launched European business-class services.

With capacity remaining restrained, BA again set a new high for passenger-load factors, running at above 73% over the quarter. Load factors have continued to rise into July, topping the 80% mark for the first time ever and marking a fifth successive monthly rise.

Promotional offers and rising long-haul traffic helped to push down yields, however. Marshall warns that yields will remain under pressure, but adds that he expects to start seeing a growing contribution from BA's alliance partners during the rest of the year, including the group's 25% share of Qantas profits, which will be included in the accounts from the September quarter.

BA reports that losses at Deutsche BA and TAT are also now beginning to fall.

KLM pushed up net profits to DFl135 million ($86.6 million) over the quarter, despite, resuming pension contributions of DFl68 million and paying tax of DFl35 million, neither of which were in the results a year ago. The airline's two pilots' strikes also cost around DFl20 million.

The strength of the Dutch guilder, further depressed the figures, leaving the airline showing a sizeable drop in both cargo and passenger yields. Stripping out the exchange-rate fluctuations, KLM says that yields actually showed a slight rise, aided by a continued rise in business travel.

The Dutch carrier also reached passenger-load factors of nearly 73% and has again topped the 80% mark in July.

The results add further fuel to signs of recovery throughout the European airline industry. Figures from the Association of European Airlines (AEA), show international passenger traffic rising at 8.4% for the quarter, led by a 10% rise on transatlantic and intra-European services. Freight also reached the 10% mark.

Elsewhere in Europe, Austrian Airlines chairman Herbert Bammer says that the carrier is confident of returning to profit in 1995, having held its losses to ASch141 million ($15 million) for the first six months of the year. The airline raised capacity by 20% over the half, with the addition of two Airbus A340s, but passenger volumes followed with growth of over 15%.

Source: Flight International