Eastern US cities were hit by blizzards

First class and business cabins suffered particularly - seeing traffic slumping by 14.3% - as winter weather and fears of Iraq war continued to plague the UK flag carrier.

Eastern US airports were hit by "major" snow storms, while London's Heathrow and Gatwick airports suffered security scares.

"The economic and political environment is challenging as the threat of war and terrorism grows," the airline said.

Hard times

The figures come amid a troubled time for British Airways which, in line with other major airlines, was severely hit by the aviation downturn following the September 11 attacks.

The carrier posted a �25m profit for the last three months of 2002, after a �160m loss the year before, but warned of an increasingly tough business environment.

And, after in December regaining a place in the FTSE 100 league of the UK's top 100 listed companies, the poor performance of BA shares in recent weeks mean it is in danger of relegation.

The firm's stock closed 5.25p lower at 96.25p in London on Wednesday, valuing the company at a little over �1bn.

Watchdog attacked

A decision last week by aviation watchdogs to allow Heathrow to raise landing charges by up to 50% over the next five years was seen as a further blow to airlines, notably BA, which has switched many operations to the airport from Gatwick.

BA on Wednesday renewed its attack on the levy rise, designed to provide cash to help Heathrow's owners, BAA, fund the construction of a fifth terminal at the airport.

"The airline believes the new charges are stacked against airlines and passengers, and go way beyond the requirements needed to fund BAA's capital programme," BA said.