International Consolidated Airlines Group (IAG.L) chief executive Willie Walsh has warned on the impact of rising fuel prices on the company's balance sheet.

Fuel costs were up 30.9 per cent to more than €1 billion during the first quarter compared to just €862 million last year.

Walsh said, 'Fuel costs remain the big challenge facing the industry and we have seen a 31 per cent rise in the quarter. On a unit cost basis, fuel is up 20.1 per cent.'

The company has forecast total fuel cost for the year to reach €5.2 billion.

The group - which includes BA and Iberia - made a pre-tax loss of €47 million (£41.6 million) for the first quarter of 2011. However, this compared to a loss of €273 million (£241.4 million) for the same period last year.

Walsh added, 'These are the first ever IAG results and they show an improved performance compared to last year.

'Revenue is up due to increased volumes, particularly in the premium cabins, and improved yields which also showed good premium growth.'

The chief executive said the company had increased capacity without additional aircraft and employees and was confident of meeting synergy targets.

In its outlook for the rest of the year, the company expected 'significant growth' in operating profit but warned events in Japan and the Middle East could have impact operating profits for the year by up to €100 million.

The company revealed separately that group traffic had increased by a quarter (24.9 per cent) in April in revenue passenger kilometres.

Group premium traffic for the month of April also increased by 40.0 per cent, while non-premium traffic increased by 22.6 per cent growth in non-premium traffic, compared with the previous year.

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