Analysis
By Declan Curry BBC Breakfast's Business Presenter

British Airways has reported its worst results since it was privatised 15 years ago, but its annual loss of �200m is not quite as terrible as it seems.

They may not have said "great news - we lost 200 million quid!", but that sums up the relief at British Airways and in the City about the airline's latest losses.

At first glance, the figures are frightening. BA has turned in the worst financial performance since it was privatised back in the 1980s.

Even though it's still losing a fortune, there's relief that it isn't losing more

A calamitous year has sent the airline from healthy profit to bulging loss.

The amount of business the company writes has dived by 10%, with turnover coming in at �8.3bn.

Fewer people are flying on its planes - passenger numbers overall are down by 4.5% over the last year.

In the Asia-Pacific region, the number of passengers has slumped by 18.4%.

But there's one good reason to take the club-class champagne out of the ice bucket.

Today's loss was much lower than the City's analysts had been predicting.

Qualified relief

One team of company watchers had predicted an underlying loss of as much as �460 million.

So, even though it's still losing a fortune, there's relief that it isn't losing more.

The heroes of the hour are the bean counters

And the credit for keeping the lid on its losses is going straight to the boardroom.

But not to the chief executive or the chairman.

The heroes of the hour are the bean counters - BA's finance director, John Rishton, and his team.

Their tight control on costs has stemmed the flow of red ink.

On a tight leash

The total cost of BA running its business in the first three months of this year was 12% lower than it was exactly one year before.

Ignoring the savings from the thousands of jobs cuts, the cost of doing business still fell by 6% over the year.

Put simply, Mr Rishton and his colleagues have made the company's nuts and bolts cheaper.

BA is paying less for its fleet of planes, less for the fuel that keeps them flying, and in some cases less for the rights to land and take off at airports.

And it has made that core part of its business cheaper to run without - apparently - damaging the service.

That's earned the company some praise from the big shareholders and institutions.

One fund manager said securing these cuts without affecting operating performance was the most impressive part of today's story.

The savings appear to have been won through good old-fashioned, poker-school negotiation.

Crisis management

The crisis in the airline industry may have given BA a stronger hand when dealing with suppliers, finance companies and airports, but it also had the people who knew how and when to deal those cards to best effect.

But today's book-juggling will appear easy by comparison with the bean counters' next big task.

At the last count, BA owed some �6.6bn.

Put another way, it owed its lenders and creditors nearly �2 for every �1 worth of BA shares on the market.

It's not a crippling debt burden of the size that BT or Marconi ended up with, but BT's recovery - and Marconi's continuing near-death experiences - show the debt has to go before solid recovery starts to set in.

BA's problem is that there's not much spare cash to give to the bank manager.

Don't misunderstand this - BA is no longer seen as being in danger of running out of cash.

It's just that there's very little left under the mattress for emergencies or prudence - especially as the cash cow Go was sold (to someone who made even more money out of it).

The company can't look to its trading to generate a surplus.

BA's chief executive Rod Eddington says he expects his market to remain "soft" over the next year.

The analysts say BA will turn in another loss next year, and they're not ordering in the marching bands for the year after that just yet.

New money

So how will BA raise cash to cut its debts? There is one easy answer - to take more money off its shareholders.

But the company says that's not an option, and it has no plans either to create new shares and sell them, or swap some debt for new shares.

That assumes, though, that BA will have the freedom to make that decision.

Its lenders may have other ideas, especially if BA continues to struggle against the low-cost carriers in Europe, and if the pick-up in its trans-Atlantic business is delayed.