British Airways raised hopes it can manage a turbulent year ahead by paying its first dividend since 2001 and lifting profits 45 percent as it said fuel costs are set to rise GBP1 billion pounds (USD$2 billion).
Shares in Europe's third-biggest airline, which have fallen 12 percent in the past fortnight, surged 8 percent.
British Airways said it was reviewing its capacity, costs and network against the backdrop of economic pressures and high fuel prices, and said revenue growth this financial year was likely to be at the lower end of its previous forecast range of between 4 percent and 4.5 percent.
However, the group said strong results for the year ended March 31 proved it was up to the challenge.
Pretax profit rose to GBP883 million, the group met its operating margin target of 10 percent and announced a dividend of 5 pence, the first payment since 2001.
Some analysts remained cautious, however.
BA's shares have more than halved in value in the past 15 months, hit by rising fuel costs, a deteriorating economic outlook and, more recently, a chaotic opening of the new Terminal 5 at London's Heathrow Airport.
"The first quarter will be particularly difficult (...and) the full year will also be challenging," BA said in its outlook statement.
"As a result, we have reduced capital expenditure and are reviewing our capacity, costs and network."
BA reiterated that it remained in talks with American Airlines and Continental Airlines to explore possible opportunities to cooperate.
It also said it had sorted out problems at Terminal 5.
"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," it said.
BA said that based on the current oil price of USD$120 a barrel its fuel bill for this year would increase by around GBP1 billion to over GBP3 billion.
However the firm, which uses about 6 million tonnes of jet fuel a year, said the damage was limited.
As a result of further hedging, it said it now expected every USD$1 change in the crude oil price to affect profit by GBP16 million, down from GBP18 million previously.
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