British Airways feels pinch as slump grounds the high-flyers

The collapse in consumer and business confidence is dragging down Britain's leading airlines into their worst-ever performances and costing more jobs in the aviation industry.

British Airways today admitted it is set to make two years of losses running into several hundred millions of pounds after an unprecedented 20% collapse in passengers travelling in first and business class, the cabins where it makes most of its profit.

Budget rival easyJet, meanwhile, reported its first drop in monthly passenger numbers as it admitted it is not prepared to cut fares on some services just to keep people flying.

At a meeting with City analysts today BA said it expects revenues to dive by 5% over the next year.

That means the airline now admits it is anticipating operating losses of £150 million in the next financial year to March 2010, matching the £150 million operating loss it expects to make this year.

BA has never made consecutive years of losses since it was privatised two decades ago. In real ity, its losses over the two years are likely to be far higher as it slashes yet more jobs and picks up further large redundancy bills.

Chief executive Willie Walsh has targeted £300 million of cost-cutting through to 2011.

Having grown helter-skelter in the decade since its launch, easyJet admitted today it carried 8000 fewer passengers a day in February, down 6.8% year on year for a total for the month of just over three million.