British Airways (BA) has announced a worst-ever first-quarter loss of £45m, which has been primarily blamed on the twin effects of the second Iraq war and the outbreak of the Sars virus.

With demand for flights already depressed due to the weakened state of the UK economy, industry insiders are also predicting that it will now be even more unpredictable following the recent Heathrow ‘swipecard’ strikes. These could also subtract between a further £30m to £40m in direct costs from BA’s yearly profits for 2003 while forward bookings have already begun to be adversely affected by the strike action.

In the first quarter, BA’s revenues were down by more than 10 per cent to £1.8bn with yields down by 12.7 per cent. Although the loss is actually smaller than some predicted, it still means that BA will quite probably fall into the red for 2003 as a whole.

However, there was one piece of good news in BA’s results announcement. The company’s huge cost-cutting campaign, known as Future Size and Shape, is ahead of target with net costs down more than five percent on 2002’s figures to £1.6bn. Details: www.londonstockexchange.com