Gestures do matter and the decision by Willie Walsh, chief executive of British Airways, to forgo his £625,000 bonus will end speculation over whether he will keep his job.

Mr Walsh has now apologised for the chaotic opening of Heathrow's Terminal 5 in March and personally paid for it as well.

The BA boss has also strengthened his position by delivering on a promise to reach profit margins of 10 per cent, equivalent to an operating profit of £875 million.

This has enabled BA to give shareholders their first dividend in seven years. This is an excellent result and it will not be Mr Walsh's fault when it is not repeated in the coming year.

Sustained high oil prices combined with an economic slowdown will cause havoc in the airline industry and BA's profits are expected to collapse. BA will attempt to mitigate this by reducing capacity next winter and cutting costs but both strategies can only slightly curtail the damage.

Of more significance is the move BA has made to increase the amount of fuel it has hedged. This has increased by about 15 percentage points in the past couple of months and BA now has 72 per cent of its fuel requirements hedged at $88 a barrel during the second half.

This protection could be the difference between BA losing money and making a small profit this year. As a result it is unlikely that investors will blame Mr Walsh for the worsening environment BA finds itself in.

However, there is one area where Mr Walsh could struggle in the coming months. BA's employee relations have always been awkward and the company will meet its pilots' union in the High Court on Monday to decide whether it can take industrial action.

The dispute is over plans to start a new carrier called Open Skies, which will operate from continental Europe to the United States. The pilots are threatening to strike over the introduction of this non-unionised subsidiary and this action could ground the airline, adding to the reputational damage caused by the T5 debacle.

After the good work done by Mr Walsh today, he does not need to weaken his position next week by picking a fight with his workforce.

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