British Airways has reported a smaller-than-expected quarterly loss of £50 million - but warned it still faces a record annual shortfall.
The airline said hefty cost cutting measures had helped improve performance in the three months to December 31. Analysts had expected the firm to post a much greater loss of £150 million in the period.
BA also reported its first operating profit for more than a year for the quarter.
Chief executive Willie Walsh said the results reflect "permanent change" to the business and said operating costs were down more than 10%.
BA has yet to stem the fall in passenger numbers and said these were down 8.7% for the UK and Europe in January compared to a year earlier - declining steeply from the nine month fall of 4%.
The freezing winter weather continued to take its toll, with heavy snowfall at the beginning of the month causing disruption in the UK and Europe.
The International Air Transport Association has said last year was the worst year on record for the industry.
In the nine months of the financial year so far BA passenger revenues were down 13%, with a 3.9% reduction in capacity.
Losses for the year so far have reached £342 million, from £70 million the previous year after BA posted a record deficit in first half trading - a normally buoyant period because it contains the holiday season.
BA said the better trading seen in the third quarter is likely to continue to the end of its financial year, with continued improvement in long haul routes.
