Martin Broughton, the chairman of British Airways, admitted today that profits are likely to be wiped out this year as soaring fuel costs and the economic downturn pile the pressure on the UK's flagship airline.

Mr Broughton told shareholders at BA's annual meeting that it would be a "considerable achievement" if BA broke even for the current financial year.

The airline's chairman said that, with the oil price surging above $140 a barrel amid fears of a global recession, BA and its peers are "up to our necks in the biggest crisis the aviation industry has ever known".

He spelled out to investors that, with oil at $85 a barrel - a price last reached in February - BA would be on course for handsome profits.

"But the nearer the oil price moves to $125, the nearer we would come to the red. And with the oil price stabilising around where it has been for the last few weeks, the implications are obvious," he said.

Without going into detail, Mr Broughton said BA "will make changes". It was not clear whether he was signalling job or other cost-cutting ahead.

However, he said tough market conditions meant that BA had embarked on a review of how it might trim back its planned flights this year. He said it was likely the airline would abandon initial plans it had to increase flights by 2 per cent over the period.

"This will not be an easy year," he said.

For the 12 months to end of March, BA made pre-tax profits of £883 million on a 3.1 per cent increase in revenues to £8.76 billion.

BA shares lost almost 5 per cent of their value on the news, tumbling 10.15p at 197.1p.

Mr Broughton, and his chief executive Willie Walsh, are battling an unprecendented increase in fuel costs thanks to a surge in the oil price to above $140 a barrel this year.

Mr Broughton told shareholders that fuel costs were likely to reach £3 billion for the year, some £1 billion ahead of the airline's initial target.

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