BA boss: Airline industry in crisis

The industry had been hit by a "devastating combination" of an economic downturn, declining consumer confidence and high oil prices, he added.

BA had to "embrace the new realities and create a stronger business" in order to come through the economic storms, Mr Walsh said.

In a speech to the London Chamber of Commerce, he repeated his forecast that more airlines would fail in the months ahead.

It was vital that BA's link-up plans with giant US carrier American Airlines went ahead and that an extra, third, runway was built at Heathrow, Mr Walsh said.

He also said that Heathrow's Terminal 5, which opened shambolically last March, was now working well and was "a great step forward for passenger capacity at Heathrow".

Mr Walsh said: "This is a critical period in the history of aviation. Let no-one be in any doubt. This industry is in crisis - a deeper, more protracted, more fundamental crisis than 9/11, the Gulf War or any of the previous shocks that have beset the industry since the age of mass air transport began in the 1970s."

He continued: "The reasons for the crisis are now well known. Despite a recent and perhaps temporary fall, oil prices stand at extremely high levels and look likely to stay there. Meanwhile, demand for travel has weakened because of the general economic downturn and a decline in consumer confidence. All in all, this is a devastating combination.

"Around the world, about 30 carriers have failed this year - and there will be more to come as we head toward the traditionally poorer returns of the winter travel season."

"IATA, the airline trade association, has just forecast that losses for global aviation will reach £3 billion this year and £2.3 billion next year. So there is no doubt the crisis is real. The challenge for us at British Airways is how we respond."