The airline made a pre-tax profit of pounds 1.1m last year, an increase of 32.5 per cent over the previous 12 months.
Sir Michael Bishop, chairman, said: 'We hope this is the end of a three- or four-year period of marginal profitability. The trends in traffic lead us to believe that we are out of the trough.'
He said British Midland's passenger traffic in June was 9 per cent better year-on-year and July was heading for a 12 or 13 per cent rise.
Sir Michael said the return to stronger growth would have a significant effect in the second half. He declined to give last year's results for the parent company, Airlines of Britain, which includes Manx Airlines and Loganair, the Scottish carrier.
Results for the group will not be published until negotiations over a proposed management buyout for the loss-making Loganair have been concluded.
Sir Michael's comments coincided with the most recent traffic figures from BAA, showing that its seven British airports handled 9.1 per cent more passengers in June over last year, with Gatwick showing the largest monthly growth for three years.
Sir Michael was speaking at the launch of a code-sharing agreement between British Midland and Austrian Airlines. The airline now has eight code-sharing agreements including those with Virgin Atlantic, American and United.
Sir Michael said that British Midland had gained between 5,000 and 7,000 passengers because of the railway signalmen's industrial action.
'People have had trouble getting to and from airports such as Gatwick and Stansted, and so have switched into our flights from Heathrow,' he said. However, rail strikes seldom had a long-term benefit for airlines.
Sir Michael also promised to put up a robust fight against competition from the Channel tunnel. He believes that many travellers will eventually find it easier to reach Heathrow.Reuse content