British Airways announced a year of record profits yesterday. But Willie Walsh, the group's no-nonsense Irish-born chief executive, left investors in no doubt that BA - along with the rest of the aviation industry - is heading into very rough weather.

If oil prices stay at current record levels of more than $125 a barrel, its profits would be wiped out this year and losses would loom a year later. If the oil price moves even higher, BA could be lossmaking this year, a dramatic reversal of the 10 per cent profit margin it reported for the first time in its history yesterday.