Hayley Millar reports on the background to these latest figures

The company is not lacking passengers, but to many - highly profitable - business travellers BA is not the world's favourite airline anymore.

However, the losses were smaller than most analysts' had predicted and BA says it would have still turned in a profit of £42m had it not been for a debt revaluation charge because of fluctuations in the Japanese currency, the yen.

The airline's chief executive, Robert Ayling, remains bullish about the future: "British Airways will emerge from the current difficult market conditions with lower costs and an aircraft fleet focused on the most profitable sections of the market."

He said the medium-to long-term prospects for the business were "very good indeed" and predicted that the £1bn cost-cutting drive known as the Business Efficiency Programme would eventually pay off.

It is this cost-cutting, though, that got BA into trouble in the first place. Staff morale is said to be low and a strike during 1997 hit business hard.

The £75m loss during the three months to December compares with an £80m profit the year before. It is the airline's first quarterly loss since 1995 and its first third-quarter loss since it was privatised in 1987.

For the first nine months of the financial year, BA reported pre-tax profits of £310m, down from 510m a year earlier.