LONDON -(Dow Jones)- U.K. carriers British Airways PLC (BAY.LN) and Virgin Atlantic Friday signalled the start of recovery after they survived a tough economic downturn amid huge disruption from the Icelandic volcanic ash cloud and, in BA's case, a long-running dispute with cabin crew.

BA, which despite reporting a wider first-quarter pretax loss as disruptions cost it GBP250 million, said the steady recovery continues and it remains on course to break even for the year on a pretax basis after two years of consecutive losses.

"The trends in our passenger and cargo traffic continue to be positive with yields up and costs down," said Chief Executive Willie Walsh. "Our cost performance continues to follow last year's trend with total costs for the quarter down 3.3%. Our focus must remain on cost control as we grow and continue our quest for permanent structural change across the business."

The company noted the risk of a double-dip recession, but said it still expects to break even on a pretax basis for the year as "steady recovery continues."

Walsh said he was seeing not signs of further downturn but said it would act quickly to weather any future downturn.

Virgin Atlantic's Chief Executive Steve Ridgway echoed his comments.

"The start of the year has been encouraging, despite difficult trading conditions. Demand is picking up across the majority of our routes and forward bookings for the summer have been very positive," Ridgway said.

BA said its pretax loss in the three months to June 30 widened to GBP164 million from a loss of GBP148 million in the same period a year ago because of GBP10 million higher interest costs associated with the convertible bond it issued last year and a GBP5 million negative impact of non-cash foreign-exchange movements.

On an operating basis, BA's loss narrowed to GBP72 million from GBP94 million a year earlier as yields rose and costs fell.

Total costs for the quarter fell 3.3% to GBP2 billion as fuel costs fell 0.7%, the airline said. Non-fuel costs dropped 4.3% to GBP1.43 billion. Walsh said that he expected costs for the fiscal year to be flat compared with last year as non-fuel costs will fall, while fuel costs will rise.

After one of the worst economic downturns in decades, coupled with a series of challenges including strikes by cabin crew and disruption to services caused by clouds of volcanic ash over most of Europe, first-quarter revenue fell to GBP1.94 billion from GBP1.98 billion a year ago.

However, average passenger revenue per filled seat for each kilometer flown, or yield, rose 13.5% to 6.88 pence, from 6.06 pence a year ago, while yield rose 12.7% on a constant currency basis.

At 0713 GMT, BA shares were up 1.2%, or 3 pence, to 219p.

Meanwhile, long-haul rival Virgin Atlantic said its first-quarter revenue for the three months to May increased 10% to GBP513 million, boosted by increased load factors, greater share of the more lucrative business class market and cargo revenue edging up GBP52 million.

Virgin's load factor, which measures the proportion of the plane that's filled with paying passengers, increased five percentage points to 82%, while its business class market share increased by 5% to 15%.

CEO Ridgway said, "The early action that we took to deal with the losses from the worst recession on record not only enabled us to protect the business, it provided us with a strong platform for growth this year."

Customer compensation and operational cost from ash clouds in April will total GBP30 million.

Virgin also said its 12-month revenue to end-February fell 8.6% to GBP2.36 billion, which led to an operating loss of GBP132 million.

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