Shares in British Airways slipped on the London stock market this morning as a second day of wildcat strikes brought more chaos to tens of thousands of holidaymakers hoping to travel from Heathrow airport.

Going into the end of the morning session, shares in BA were 3p lower at 289.25p - a fall or more than 1 per cent. Earlier they had fallen 2.5 per cent in a sliding London market.

BA has a stock market value of nearly £3.2 billion.

The share price fall suggests that City investors are beginning to worry about the possible damage to BA's reputation - and its finances - after it cancelled all flights until 6pm today and advised prospective travellers to stay away before then.

When a strike by check-in staff forced BA to cancel 500 flights just over two years ago, it suffered a financial loss of £40 million.

BA yesterday cancelled 121 flights, and a further 500 today. If cancellations continue over the weekend, the eventual loss to the airline could be substantial.

"Financially people are talking 10 million pounds a day in the short-term, but obviously longer-term there’s the hit it takes in terms of customers and how it’s perceived by clients," Henk Potts, an investment manager at Barclays Stockbrokers, told Reuters.

BA said this cost estimate was speculative and that it was too early to estimate the cost of the strike - its priority being with the "operational issues" associated with getting passengers to their appropriate destinations.

It said this morning: "The airline is keeping the situation under constant review and is working hard to resume its flying programme as soon as possible. However we expect there to be severe disruption in the coming days."

BA will have to bare the increased administrative costs of rebooking customers whose flights have been cancelled, although this likely to be after the weekend, when more flights will have been delayed. BA is also offering travel to alternative destinations and, if customers want it, a refund.

Gate Gourmet, the catering company whose sacking of 800 workers sparked an unofficial walkout by BA staff, declined to return calls from Times Online seeking up-to-date comment on the progress of negotiations.

Gate Gourmet, owned by American private equity firm Texas Pacific, last night rejected a compromise deal offered by the Transport and General Workers Union in which staff could be reinstated in exchange for changes to working practices.

However the company has described itself as in "financial crisis". It has not made a profit since 2000 and revenues have fallen by 35 per cent.

Gate Gourmet said earlier this week: "Without restructuring it will lose £25 million this year.

"The new management is in the process of delivering a successful turnaround strategy; it has implemented non-labour related cost reductions, introduced a programme to decrease regional overheads and is in the process of finalising renegotiated contracts for the commercial terms with customers.

"These changes , combined with a £14 million reduction in direct labour costs, would enable the company to break even in the next 18 months and safeguard its future."

The TGWU today sent a letter to BA confirming that it will not support the unofficial action by striking BA staff.

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