Nov. 7 (Bloomberg) -- British Airways Plc, Europe's third largest carrier, reported a first-half loss because of higher fuel costs and declining traffic.

The net loss of 49 million pounds ($77 million), or 4.3 pence a share, compared with net income of 493 million pounds, or 42.9 pence, a year earlier, British Airways said in a statement today. Analysts had estimated profit of 64 million pounds. Sales rose 6.4 percent to 4.75 billion pounds, beating the average analyst estimate of 4.57 billion pounds.

The London-based carrier raised its forecast for full-year revenue growth to 4 percent from 3 percent. Non-fuel costs will rise by 5 percent this year, compared with an earlier estimate of 3 percent, the airline said in the statement. The airline's estimate for its fuel bill this year remained unchanged at 3 billion pounds.

European airlines are reeling after a surge in the price of oil, which led to record fuel prices in July, and was followed by a slump in economic growth, reducing demand for travel. The International Air Transport Association forecasts that global losses for the industry will exceed $5.2 billion this year.

British Airways is trying to push through a merger with Iberia Lineas Aereas de Espana SA, Spain's largest carrier, as the pace of industry consolidation accelerates. The tie-up may yet face hurdles amid concern that the U.K. carrier's pension deficit is widening and may require further cash injections.

The airline may face more competition on its lucrative trans-Atlantic routes next year, after Deutsche Lufthansa SA said Oct. 29 that it intended to buy a controlling stake in BMI, the second-largest carrier operating out of London's Heathrow airport.

British Airways also said today that traffic, the number of passengers multiplied by distance flown, fell 4.4 percent in October. Load factor, or the proportion of seats filled, fell 3 percentage points to 77 percent.

To contact the reporter on this story: Steve Rothwell in London at srothwell@bloomberg.net

Last Updated: November 7, 2008 02:21 EST