Profits at Bmi fell by almost 50 per cent last year but the British airline claimed that it would survive the current difficult trading conditions in the aviation industry.

Revenues for the year to December 31 rose by 12.9 per cent to £1,022 billion, after the company acquired British Mediterranean (BMED), the former British Airways franchise for £30 million, but pre-tax profits were down 47.8 per cent to £15.5 million.

Sir Michael Bishop, chairman of Bmi, said: "Our underlying trading performance continues to be resilient against a background of difficult trading conditions throughout the aviation industry. The prospects for any significant immediate improvement remain unlikely, but we continue to invest for future growth and are well equipped to achieve it."

A spokesman for the airline, which is the second largest at Heathrow, said that 2006 pre-tax profits of £29.7 million had been flattered by a £16.7 million profit on sales of slots at Heathrow. The private company has refused to disclose its fuel costs in the latest results and would not say what hedging it had in place for this year and the next. Oil prices have more than doubled since last autumn and, at about $130 a barrel, are pushing airlines' profitability to the limits.

The airline said that its load factor had slipped by 4 percentage points to 67.4 per cent.

Nigel Turner, chief executive of Bmi, said the airline's strategy remains to develop all three arms of the business - bmi regional, bmibaby and the main carrier - and realise the potential of Bmi's Heathrow slots.

"The development of London Heathrow remains an issue of concern. The resulting delays and disruption at the opening of Terminal 5 and the choreographed terminal moves, which will continue until the opening in 2012 of Heathrow East, have the potential to affect all Heathrow carriers," Mr Turner said.

On the issue of rising fuel costs and a possible downturn in consumer spending, Mr Turner said: "Trading conditions will be challenging for the entire aviation sector in 2008 with significant increases in costs that are outwith the control of bmi. Nevertheless, we believe that actions that were taken in the past in redefining our strategy and focus going forward, means we can face these difficult conditions from a position of strength."

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