July 30, 2010 –   * Q1 pretax loss 164 million sterling vs 148 million sterling loss

* Q1 revenue 1.93 bln sterling vs 1.98 bln sterling

* Analyst says BA has turned the corner into positive phase

* BA shares 2.9 percent up

(Adds company, analyst comment, shares, detail)

By Rhys Jones

LONODN, July 30 (Reuters) - British Airways still expects to break even in the full year, despite reporting wider first quarter losses due to the impact of volcanic ash and strike-related disruption, sending its shares higher.

The British carrier's pretax loss grew 10.8 percent to 164 million pounds ($256.4 million) for the three months to the end of June, while revenues fell 2.3 percent to 1.93 billion pounds.

However, BA's yields -- the revenue it makes on each passenger for every mile travelled -- rose 12.7 percent as costs fell and it maintained previous full-year guidance.

"While some economic experts are flagging the risk of a "double dip" recession, the steady recovery continues and, on that basis, we continue to target to break even at a profit before tax level for the full year," said BA Chief Executive Willie Walsh.

Shares in BA, which has lost around 1 billion pounds in the last two years, were 2.9 percent up at 222.5 pence by 0733 GMT, valuing the business at around 2.5 billion pounds.

"The underlying revenue trends, control over non-fuel costs and recent good news on the strategic issues (Iberia and American Airlines) continue to suggest that BA shares have turned a corner into a more positive phase," said Societe Generale analyst Jonathan Wober.

EADS, the parent company of European planemaker Airbus, on Friday said it boosted its revenue and commercial airplane forecasts, adding to signs that the sector is back of its feet after a deep two-year industry downturn.

The Unite union, which represents BA cabin crew, has been embroiled in a long running dispute with the airline, which has resulted in a series of strikes costing BA 150 million pounds.

It was also hit by the spread of ash from an erupting volcano in Iceland, which grounded much of Europe's air traffic for a week in April, and cost the airline around 100 million pounds.

BA, whose merger with Spain's Iberia was unconditionally cleared by the European Commission earlier this month, said passenger revenue fell 3.4 percent in the period but that without any disruption it would have jumped 11 percent.

The British carrier also won EU antitrust clearance to deepen its pact with American Airlines a fortnight ago after agreeing to cede some lucrative trans-Atlantic routes.

"We can now sit down with American and share commercial information that we previously couldn't, so that is ongoing," said Walsh.

"We will be developing and refining plans on the basis of that shared information over next couple of months." (Editing by James Davey, Mike Nesbit) ($1=.6395 pounds)