BA crashes £401m into red in ‘worst performance ever’

British Airways has plunged £401 million into the red, its worst performance on record. The airline's crash comes despite 20,000 job cuts in recent years and 2,500 in the last 12 months.

Under-pressure chief executive Willie Walsh said current trading was the harshest ever and the outlook was bleak. He is looking for further job cuts and said 16 aircraft would be mothballed Having already opened talks with trade unions, Mr Walsh has slapped a pay freeze on BA staff and told them they can go on unpaid leave or switch to part-time working.

City analysts predict that the crisis will see the end of BA's independence, hastening it into a defensive merger with Spanish carrier Iberia and into a transatlantic alliance with American Airlines.

The depth of the problem at BA is highlighted by the fact the £401 million loss comes only 12 months after it reported a record £922 million annual profit. BA carried 1.5 million fewer passengers last year at 33.1 million and recent trading figures indicate the falls this year are going to be worse.

BA's woes, however, could be good news for passengers. Mr Walsh indicated the airline had switched from trying to attract high-end passengers flying on expensive tickets in business and first class, who contribute most to BA's profits.

Instead Mr Walsh said he was now prepared "to chase volume" or offer cut-price tickets to keep as many people flying BA — rather than easyJet or Ryanair — as possible. Mr Walsh blamed BA's woes on the economy. "The prolonged nature of the global downturn makes this the harshest trading environment we have ever faced," he said.

James Hughes, analyst at CMC Markets, said: "As was widely expected BA posted a thumping loss, reflecting the calamitous state of the global economy. No dividend, capacity cuts and job lay-offs are set to follow in the coming months."