British Airways boss Willie Walsh under fire

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As expected BA recorded a first-quarter loss for the first time in its history reporting a swing from profits of £37 million to losses of £148 million in the three months to end-June. But that was considerably worse than most City forecasts. Underlying revenues dropped 17%.

Walsh said: "The industry continues to face very difficult trading conditions with considerable uncertainty over the likely timeframe of the recovery from the global economic downturn."

BA's losses come in the same week that Air France-KLM. Lufthansa and Singapore Airlines reported huge losses but low-cost carriers Ryanair and easyJet remained in profit.

Walsh said: "Underlying volumes and seat factors have stabilised during the first quarter and are expected to improve in the peak summer months. Yields will be under pressure from the year-on-year impact of lower fuel surcharges, exchange movements and the mix of business and leisure passengers. Yield uncertainty continues to make revenue forecasting difficult."

BA is raising £680 million from the City and today announced that it will cut capital spending by a fifth this year from £725 million to £580 million largely by delaying new aircraft deliveries.

Walsh said he still wants to merge with Spanish airline Iberia and had recently held a "constructive meeting" with its management.