It has been touted as the world’s favourite airline — and occasionally been one of its most derided — but as it turns 90 today British Airways is facing its worst crisis so far.

Willie Walsh, the chief executive, has warned that BA is in a “fight for survival” and has launched a clampdown on costs across the company.

Passenger numbers have dropped dramatically, forcing BA to offer discounted fares to keep its aircraft full. It announced losses of £401 million last year and lost a further £94 million in the three months to the end of June.

The airline pioneered many of the advances that passengers now take for granted, including onboard service and transatlantic jet flight. In partnership with Air France, its Concorde aircraft ushered in a glamourous era of supersonic passenger flights, which lasted for 24 years before 113 people died in an Air France Concorde crash and the service, already struggling under commercial pressures, was grounded.

Talks beween BA and unions representing 14,000 cabin crew continue this week after the two sides failed to reach agreement last month, prompting fears of strike action.

Mr Walsh wants to reduce cabin crew and ground-staff numbers by 3,400, cut pay and put workers on new contracts that will end many of the perks that staff presently enjoy.

More bad news is expected next month when its pension trustees will announce that the fund deficit has nearly doubled to about £3 billion.

Even passengers are on short rations after the airline stopped serving meals on short-haul flights and long-haul business-class passengers were invited to help themselves at breakfast.

Regular BA passengers have started to question whether the company’s relentless focus on cutting cost chimes with its boast, now 26 years old, of being the “world’s favourite airline”.

“Other airlines are trying to raise their game, but BA’s response to the downturn seems to have been to cut service,” one regular business-class passenger said.

BA began life at the Hounslow Heath aerodrome (later Heathrow) as Aircraft Transport and Travel — only 16 years after the Wright Brothers made their first flight in North Carolina.

The airline operated a First WorldWar-era de Havilland biplane to Le Bourget in Paris for the extravagant sum of 42 guineas return.

Within a couple of years, Aircraft Transport became Imperial Airways and, by 1929, had launched the first UK-to-India service, which took more than week and had 20 stops.

The first “British Airways” was launched as a rival to Imperial in 1936 and it was from a Lockheed 14 operated by this airline that Neville Chamberlain descended in 1938 to declare “peace for our time”.

The two carriers were merged and nationalised in 1940, creating the British Overseas Airways Corporation (BOAC).

The BA name returned in 1974 when BOAC merged with British European Airways (BEA), the short-haul carrier. The company was sold off as part of Margaret Thatcher’s privatisation bonanza in 1987.

More than one million people subscribed for BA shares, priced at 125p each, and they have experienced a wild ride as investors ever since. BA’s share price climbed to 760p in 1997, but has since fallen below its issue price on several occasions, including last month. It rose almost 1 per cent last night to 189.90p.

BA’s claim to be the “world’s favourite” may seem like wishful thinking, but the airline still generates affection among travellers around the globe. “Perhaps not my favourite airline but they are safe, reliable and their cabins are among the best,” a regular passenger said yesterday.

Martin Broughton, the chairman, said: “Over the past nine decades, British Airways has played its part in many historic episodes. We have a rich history supporting Britain and will carry this forward to our centenary and beyond.”

Gordon Brown, the Prime Minister, said: “Ninety years on, the world’s most iconic airline is still proudly flying the flag and remains a great British brand. Many congratulations to all its staff, past and present, on this special day.”

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