The UK Met Office has said the volcanic ash cloud poses no threat to holidaymakers planning to fly over the Whitsun bank holiday. Meanwhile Transport Secretary Philip Hammond has put a new structure in place to deal more efficiently with any future eruptions by Icelandic volcanoes.

Willie Walsh, chief executive of International Airlines Group, has said a British Airways test flight over the north of England and Scotland, where the ash cloud was meant to be at its densest, on Tuesday “found nothing”.

British Airways and the Unite union have reached an agreement to settle their two-year industrial dispute. As part of the deal BA has agreed to restore travel concessions to staff who went on strike and to award some lower-paid employees top-up payments. The agreement will now be put to a ballot of about 10,000 union members.

International Airlines Group, the company formed from the merger of British Airways and Iberia, has become the latest carrier to warned that high oil prices could cost it an additional €100m this year, whilst the Japan earthquake and Arabic uprisings have caused a similar dent. However its quarterly figures were otherwise solid with losses narrowing to €47m, down from €273m a year ago.

British Airways’ staff and pensioners will hold a meeting to protest low payments to retired workers which has caused considerable anger, according to reports.

British Airways is increasing its services to Brazil by doubling its weekly frequency to Rio de Janeiro from three to six flights.