British Airways has recorded a record financial loss of £531 million for 2010.
A fall in revenue, industrial action and disruption caused by volcanic ash all pushed losses beyond the 2009 figure of a £401 million loss.
The figure is the worst since the airline was privatised in 1987, but lower than analyst predictions of a £600 million loss.
Revenues at BA were down £1 billion on the previous year, BA said, though the airline managed to cut costs by nearly £990 million - with £600m in savings coming from lower fuel costs.
“Despite a £1 billion drop in revenue during the year, our determined efforts on cost control mean costs have reduced at a comparable level and our operating loss is virtually the same as in the previous year,” said BA chief executive Willie Walsh.
“To be in the midst of the biggest economic downturn in 60 years and produce the same operating figure as last year shows the hard work that has been put into steering our business through the recession.”
The annual report comes ahead of further strike action at British Airways.
The Appeal Court yesterday overturned a BA injunction banning the Unite union from pursuing industrial action.
The decision means up to 15 days of strike action could now resume as early as next week.
Strikes to date have cost the airline £43 million, with cabin crew walking out earlier this year in a dispute over pay and conditions.
Mr Walsh used the results to criticise the ongoing dispute: “Returning the business to profitability requires permanent change across the company and it’s disappointing that our cabin crew union fails to recognise that.
“Structural change has been achieved in many parts of the business and our engineers and pilots have voted for permanent change.
Disruption caused by airspace closures due to volcanic ash is also likely to have hit BA financially, but losses were not singled out by the airline.
British Airways also agreed a merger with Spanish flag-carrier Iberia during the financial year.
The deal will see the formation of new company - International Airlines Group – which will be based in London.
British Airways shareholders will maintain 55 per cent of the equity in the new venture, while both brands will be maintained.
“We signed our merger agreement with Iberia in early April and are on track to complete the merger by the end of 2010,” explained Mr Walsh.
“The group will generate enhanced customer benefits with a larger combined network and continued investment in new customer products and services. It will deliver annual synergies of €400 million by year five.”