Brace for two years of losses and don't expect bail-out, BA boss warns

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Chief executive Willie Walsh told the firm's newspaper, BA News, today that the airline could not rely on a Royal Bank of Scotland or HBOS-style bail-out from the taxpayer if the recession deepens.

His warning came ahead of a key briefing day in the City on Thursday when Mr Walsh is expected to confirm that the carrier is heading for two consecutive years in the red for the first time since privatisation.

Analysts at Merrill Lynch and Panmure Gordon fear that BA's losses could total as much as £470million by the end of its next financial year in March 2011.

One analyst also said that the outlook was so dire that "BA is in danger of taking on the attributes of Royal Bank of Scotland, with wings".

In today's interview Mr Walsh said BA needed to plan for no recovery until early 2011. He added: "The economic climate is the worst I've seen in my 30 years in the industry. It's clear that we should plan for 24 months of difficult economic conditions."

BA has been hit particularly hard by the banking crisis, with the number of "premium" passengers flying First and Club class down by 14 per cent. It is expected to survive the recession but the warning from Mr Walsh is seen paving the way for job cuts and pay freezes. He also confirmed there will be no management bonuses this year.

Although BA made record profits of £883million last year, in January the airline said it would make a £150million operating loss. However, at the pre-tax level the fall into the red will be much deeper. Royal Bank of Scotland's aviation analyst Andrew Lobbenberg said BA's losses in the year to the end of March will hit £372million. He said: "Premium traffic demand is deteriorating. Leisure demand is deteriorating."

BA shares have been trading close to all-time lows, a collapse in market valuation which is threatening to derail its long-mooted merger with Spanish carrier Iberia.

BA's worst loss to date is £200million in 2002, when the industry slumped after the 9/11 terrorist attacks.