British Airways has announced record annual losses of £401 million.

The airline blamed a weak pound and high fuel costs for its biggest loss since being privatised in 1987.

The announcement comes after record profits last year, when British Airways confirmed it had made £922 million.

On top of freezing pay and cutting more than 2,500 jobs since last summer, the airline is also now offering staff unpaid leave and the option of working part-time.

BA’s chief executive Willie Walsh said in a statement: “The prolonged nature of the global downturn makes this the harshest trading environment we have ever faced and, with no immediate improvement visible, market conditions remain challenging.”

Revenues in the fourth quarter for the airline were down by 8.4 per cent alone.

The sharp rise in fuel prices as oil prices soared last year also contributed to the airline’s losses.

Martin Broughton, chairman of BA, added: “In the last twelve months we have gone from a record profit to a record loss due to the current tough economic environment.

“That only serves to underline the extremely difficult trading conditions that we are facing, despite our best ever operational performance, and any recovery is likely to take longer than initially envisaged.”