BRITISH Airways has reported its worst set of results since privatisation 15 years ago with losses hitting £200m.

The group has been hit by the slump in demand for air travel following September 11 and has also faced intense competition from budget airlines such as Ryanair and easyJet.

Turnover dived ten per cent to £8.3bn in the year to March 31, and the losses - which compare with a profit of £150m the previous year - mark the worst set of results and the first full-year loss BA has reported since privatisation in 1987.

Even in the wake of the Gulf War the group did not make full-year losses, managing to break even in the year 1991-92.

To cope with the devastating slide in demand for air travel following the US terrorist attacks, the group cut routes and capacity, slashed jobs and announced an overhaul of its business.

It announced more than 11,000 job cuts following September 11.

Including the job cuts made in response to the foot-and-mouth outbreak, and losses from its regional network, it has axed 13,500 posts since last August.

The group said it did "not anticipate anything over and above that".

Chief executive Rod Eddington said the cost-cutting measures meant the group's results came in better than expected.

The City, which was well prepared for the devastating losses with analysts pencilling in figures for losses of between £200m and £400m, was cheered by the figures.

Shares jumped three per cent in morning trading to 242p - but that is still below the 264p recorded the day before September 11.

Mr Eddington said he was determined to return the business to acceptable levels of profitability.

"We have had to take a series of tough decisions this year to protect British Airways for the long term. It has meant sacrifice and hardship for our people," he said.

"The market is expected to remain soft but the swift and decisive actions we have taken show we are determined to return the business to acceptable levels of profitability."

Tim Lyle, national secretary for civil air transport at the Transport and General Workers' Union, said: "We will continue to work constructively with BA to help return it to profitability.

"The last year has been very difficult for the airline but we very much hope that the worst is over. Indeed, the losses, whilst a cause for concern, are lower than the prophets of doom had predicted."

Mr Eddington would not be drawn on making a prediction on when the group would return to profit. He said concerns about terrorism were "still with us" and would still affect people's decisions to travel.

Mr Eddington said he was not disappointed he had sold low-cost carrier Go, because it "did not fit with our core business".

BA sold Go to a management team funded by venture capital group 3i for £110m, but the firm was sold on last week for £374m to easyJet, giving 3i and Go's management massive profits.