British Airways has reported a 45 per cent rise in annual profits but warned that economic uncertainty and high fuel costs pose challenges.

BA made a profit of £883m in the year to 31 March, which BA boss Willie Walsh called an “outstanding” result.

Mr Walsh said he would not be taking an annual bonus because of the problems at the opening of Heathrow’s Terminal 5.

The airline warned that the problems with the move to Terminal 5 would hurt its earnings this year.

BA said the first quarter of the current financial year would be particularly difficult, with crude oil prices at $115 a barrel, almost double the $58 a barrel seen a year ago.

The airline’s bill for the six million tonnes of jet fuel it uses in an average year was £124m higher than the previous year, despite significant hedging and a weaker dollar.

However, total operating costs were down 0.7 per cent as a result of lower staff costs.

BA said that shareholders would receive their first dividend since 2001 and added that staff would share a £35m bonus.

However, Mr Walsh said he had turned down his annual bonus – which could have been worth up to £700,000 – after taking responsibility for the problems at Terminal 5.