It made a £922m profit in 2007/08 but this year’s figure has been hit by fuel costs rising more than 44% to almost £3bn and the recession weakening demand.
Chief executive Willie Walsh sees ‘no immediate improvement’ as the market remains challenging.
The airline made an operating loss of £220m, including redundancy-related costs of £78m, but revenues rose 2.7% to £8.99bn from £8.76bn.
BA is in talks with trade unions about pay and productivity changes, on top of the 2,500 jobs already axed since last summer.
The airline today offered staff the option of taking unpaid leave or going part-time, while Walsh and finance director Keith Williams announced they would work for no pay in the month of July.
Walsh said: 'I want everyone seriously to consider these options. Personally, I do not want extra leave or to work part-time.
'But I certainly want to make a contribution in recognition of the extremely challenging position we face. This is no stunt. I do not easily give up anything I have earned.'
Walsh is paid £735,000 a year and Williams £440,000.
BA will also cut winter capacity by 4%, grounding up to 16 aircraft.
Premium traffic was down 13% in the second half, while significant price cuts have been required to stimulate non-premium traffic volumes, which were broadly unchanged year-on-year.
In the final quarter of its financial year, BA switched from ‘driving yields to securing volume as customers became more price sensitive’, and as a result managed to increase its market share.
The airline made a Q4 operating loss of £309m, with passenger revenue down 8% and yields down 2.5%.
Commenting on BA’s bid to ally with American Airlines and Iberia, Walsh said: ‘We are optimistic that antitrust immunity will be approved in the next six months so that in early 2010 we can start to bring benefits to our customers, employees and shareholders, and enjoy a level playing field for oneworld with the two other global airline alliances.’
But he warned that the Government’s decision to double Air Passenger Duty from 2010 will ‘undoubtedly disadvantage the UK's competitive position within the airline industry’.
BA chairman Martin Broughton added: ‘The revenue outlook continues to be weak during the current financial year but we expect lower fuel prices to reduce our fuel costs by approximately £400m. In light of this, the board is unable to recommend a dividend this year.’
See also:
Iberia focuses on recovery rather than BA merger (12/05/2009)
BA/union talks continue as 300 jobs go (03/04/2009)
BA debt given junk status (12/02/2009)
BA in union talks as £70m loss unveiled (06/02/2009)
Walsh gloomy about UK plc (23/01/2009)