LONDON , England ( CNN ) -- British Airways posted the airline 's worst annual loss since its privatization in 1987 as its chief executive declared there were `` absolutely no signs of recovery '' in the industry . BA CEO Willie Walsh says he 's never seen conditions in the airline industry so bleak . The airline slumped from profit to loss in the last financial year . During the year ended March 31 , its operating loss swelled to £220 million ( $ 348 million ) from a restated profit of £878 million ( $ 1.4 billion ) in 2008 . `` I 'm 30 years in this business and I 've never seen anything like this . This is by far the biggest crisis the industry has ever faced , '' BA chief executive Willie Walsh told CNN 's Richard Quest . Follow Quest on Twitter . Demand for the airline 's passenger seats and cargo holds fell during the last financial year , while its fuel bill rocketed to almost £3 billion ( $ 4.7 billion ) . Walsh said British Airways ' woes were inextricably linked to the downturn in the global economy and that there had been no sign of any `` green shoots '' of recovery . Watch Richard Quest 's interview with Willie Walsh » . `` None whatsoever , and that 's across the board , '' he said . `` In all of the markets we 're operating in we see no evidence of recovery at this stage . I think there 's some evidence of it bottoming out in some markets but absolutely no signs of recovery at this point . '' Like its premium-class competitors , British Airways is losing customers to cheaper rivals . BA 's premium passenger numbers fell 13 percent in the second half of last year , in line with the industry average . Total traffic fell 3.4 percent and while BA carried 33.1 million passengers in last year , a drop of 4.3 percent on the previous year . The dip in demand for British Airways flights has forced a switch in strategy at the premium airline from yields to volume . From the end of last year , it 's been tempting passengers with lower fares , sacrificing profit per seat for `` bums on seats . '' `` We 're now saying it 's getting that balance between yield and volume so it 's more a focus on volume than it has been , '' Walsh said . He said the airline would target market share , `` where we believe that it is sustainable in the long term and will be profitable . '' It plans to reduce capacity by four percent next winter by parking up to 16 aircraft . Walsh said the tough trading conditions had n't killed off its plans for a merger with Spanish airline Iberia . He said the main barrier to the deal was corporate governance . `` It 's getting the corporate governance for the combined single entity right -- that 's a critical issue as far as I 'm concerned . '' `` Iberia do have some concerns about our pension deficit . We are very happy to listen to those concerns and I 'm also very confident that we can address that , '' Walsh said . Watch Quest Means Business for the definitive word on how we earn and spend our money , week nights at 1900 London , 2000 CET , 0300 HK .
BA 's annual profit disappears into a loss as the global downturn takes its toll . Passenger numbers , demand for cargo falling , fuel costs increasing . BA has shifted focus from protecting yields to chasing higher volumes . Comment: This is by far the biggest crisis the industry has ever faced ''