Willie Walsh, the chief executive of British Airways, has bowed to investor pressure and will not take his bonus because of the airline's failure to move smoothly into Teminal 5 in March.

Mr Walsh's move this morning appears to head off disgruntled investors, some of whom believe the chief executive should have resigned.

Today he dismissed calls for his resignation saying that he expected to be in the job for another 10 years.

Mr Walsh said this morning that it would be inappropriate for him to take a bonus, equivalent to his £625,000 salary, in the circumstances.

He told The Times: "I felt it was inappropriate in the context of the disappointing opening of T5 that I take a bonus. I said to the chairman that it would be inappropriate and he agreed."

The chief executive, who joined the airline in 2005, was to have received a bonus because the airline has finally achieved a six-year goal of a 10 per cent operating margin.

That target also triggers a £35 million bonus pool which will be split between 42,000 BA workers. They are expected to receive at least £500 each.

Mr Walsh said: "It is absolutely right that the people at BA who have delivered an excellent set of results should be rewarded for it."

Hundreds of thousands of passengers were stranded when the £4.3 billion Terminal 5 opened for business in March because of baggage handling problems which led to hundreds of flights being cancelled and delayed. British Airways staff were found to be unprepared for the new terminal and the smooth transition the airline had promised ended in fiasco.

Despite the problems at Terminal 5 and the soaring cost of oil, BA managed to report a strong set of results, with pre-tax profits 44 per cent higher at £883 million, on revenues 3.1 per cent higher at £8.75 billion.

The airline will also resume dividend payments - the first since 2001 - of 5p a share, at a cost of £58 million.

Shares in the airline rose 6.5 per cent to 238p by midday.

However, the results were overshadowed by a gloomy forecast for the year ahead as BA made it clear that it would cut flights from the Winter 2008 timetable as it braces itself for a difficult first quarter and a challenging 12 months.

Analysts had expected BA to issue another profit warning having already cut its margins from 10 per cent to 7 per cent this year. The company declined to give an update on its profitability this year but cut revenue forecasts to 4 per cent growth from 4.5 to 5 per cent.

"We have reduced capital expenditure and are reviewing our capacity, costs and network in the context of the economic pressures and high fuel prices," the company said in a statement. A spokeswoman said it was too early to say which flights would be cut, but destinations which BA flies to several times a day are expected to bear the brunt of the cuts.

The airline said there was scope for further efficiencies in most parts of the business, as it seeks to cope with a doubling in the price of oil that could add £1 billion pounds to its annual fuel bill.

Mr Walsh said: "This is an outstanding financial result for the company despite rising fuel prices and significant economic slowdown in the last six months."

He added: "Delivering ten per cent has not been easy, but we have achieved it by remaining focused on our strategy for the last six years."

Mr Walsh said the good results were likely to be “the high point certainly in the short term” given present high oil prices. Margins are forecast to return to 7 per cent for the year 2008-09. “The good news for British Airways is that we go into this challenging environment from the position of relative strength, ” Mr Walsh said.

Oil prices have more than doubled in the last year, pushing the airline's fuel bill up by about £1 billion. Fuel costs for the full year to the end of March topped £2 billion.

BA has increased its hedging to protect against sustained high fuel prices with 58 per cent of its requirements priced at $84 a barrel in the first six months and 72 per cent at $88 in the second half.

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