Staff have already agreed to pay cuts

This will mean BA is forced to pay �2.5m extra in higher interest rates on the money it is borrowing to tide itself through the current difficulties.

Lenders take into account the credit ratings of potential borrowers in order to assess the likelihood of bankruptcy.

Junk status means that typical interest charges rise to 8.75% from 7.75%.

Credit ratings were also lowered at other airlines including United, American Airlines, Air Canada and Delta.

Bankruptcies and consolidation

There have been fears that many airlines could face bankruptcy as a result of the 11 September terrorist attacks on New York.

Belgium's Sabena - while already facing severe financial difficulties before the attacks - has already gone bust because of the extra financial pressure created by the costs of the disaster.

British Airways has been implementing radical cost-cutting measures, including 7,000 redundancies and cutting the pay of 36,000 staff.

And BA chief Rod Eddington has said that intense consolidation will be necessary to ensure the survival of many European airlines.

BA shares closed down 4.5p at 203.5p on Friday.