LONDON (AP) — British Airways PLC said yesterday that market conditions remain very difficult as the benefits of recent falls in the price of oil have been outweighed by a stronger US dollar.

BA shares fell almost four percent after it released traffic figures for August showing a 2.7 percentage point fall in its load factor — a key measure of how full its planes are — to 77.3 percent compared with the same month a year ago.

The total number of passengers carried by the airline over the month fell 3.2 percent year-on-year to just under three million.

"Market conditions for the industry remain very difficult, with the strong dollar largely offsetting the benefit of the recent fall in oil prices," BA said in its monthly update on traffic figures. BA is expecting its fuel bill to top £3 billion ($5.3 billion) this year.

Crude oil has retreated from July's record high above $147 a barrel, to $108.23 currently. However, the British pound has slid to a two-and-half year low against the US dollar, while the euro is also down against the American currency. Oil prices and the dollar have been closely intertwined this year. The two trade inversely, as investors use oil as a hedge against inflation and a falling dollar.

BA generates much of its profit from its long-haul business and first-class ticket sales, particularly on trans-Atlantic routes — overall traffic for August comprised a 2.2 per cent increase in premium traffic and a 2.1 per cent fall in non-premium traffic — but was cautious about that key market.

"The outlook for premium bookings is uncertain as forward booking patterns for business travel develop after the summer break," it said.

BA last month signed a revenue-sharing deal with American Airlines and Spain's Iberia SA that — if approved by regulators — will see the trio set prices together and share seat capacity on trans-Atlantic flights.

BA's chief executive Willie Walsh argues that closer cooperation between the carriers will help cut costs in the current difficult economic conditions.

BA shares were 3.9 percent lower at 262.5 pence ($4.66) in afternoon trade on the London Stock Exchange.