INTERNATIONAL. British Airways still expects to break even in the full year, despite reporting wider first quarter losses due to the impact of volcanic ash and strike-related disruption, sending its shares higher.

The carrier's pretax loss grew 10.8% to £164 million (US$257.5 million) for the three months to the end of June, while revenues fell 2.3% to £1.93 billion.

However, BA's yields -- the revenue it makes on each passenger for every mile travelled -- rose 12.7% as costs fell and it maintained previous full-year guidance.

"While some economic experts are flagging the risk of a "double dip" recession, the steady recovery continues and, on that basis, we continue to target to break even at a profit before tax level for the full year," said BA Chief Executive Willie Walsh.

"The underlying revenue trends, control over non-fuel costs and recent good news on the strategic issues (Iberia and American Airlines) continue to suggest that BA shares have turned a corner into a more positive phase," Societe Generale analyst Jonathan Wobe, told Reutersr.

The Unite union, which represents BA cabin crew, has been embroiled in a long running dispute with the airline, which has resulted in a series of strikes costing BA £150 million.

It was also hit by the spread of ash from an erupting volcano in Iceland, which grounded much of Europe's air traffic for a week in April, and cost the airline around £100 million.

BA, whose merger with Spain's Iberia was unconditionally cleared by the European Commission earlier this month, said passenger revenue fell 3.4% in the period but that without any disruption it would have jumped 11%.

The British carrier also won EU antitrust clearance to deepen its pact with American Airlines a fortnight ago after agreeing to cede some lucrative trans-Atlantic routes.

"We can now sit down with American and share commercial information that we previously couldn't, so that is ongoing," said Walsh.

"We will be developing and refining plans on the basis of that shared information over next couple of months."

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