British Airways' head of Europe says any recovery will be slow

Any recovery in demand for air travel will be slow and will happen in some parts of the world sooner than in others, British Airways' European head Gavin Halliday said.

"The question is not when there is recovery as much as at what level," Halliday told Reuters in an interview at the world's largest travel fair, ITB Berlin.

Airlines around the world suffered last year as consumers tightened their purse strings and companies cut travel budgets, moving passengers from pricey business class seats to cheaper ones at the back of the plane.

In December, premium travel around the world grew for the first time in more than one and a half years, according to the International Air Transport Association (IATA). But December's figures were still down 17 per cent from the start of the global economic crisis in early 2008.

Halliday said that he has seen a slight improvement in demand for premium travel, with some small gain in yields.

"But it would be too aggressive to call that a general trend," he said.

German rival Lufthansa had warned on Thursday that European demand for business class tickets may never return to pre-crisis levels, saying it sees a lasting structural shift in demand.

British Airways last month posted a surprise third-quarter operating profit, helped by heavy cost-cutting, but said it was still in a worse position than last year, despite attempts to adapt to the realities of global recession.

British Airways is facing a possible strike by cabin crew after talks between the airline and labour unions broke down on Wednesday. The UK carrier wants three-quarters of its crew to accept a pay freeze this year, part-time working, and cuts in onboard crewing levels on certain long-haul flights. "The damage the strike threat has done to our business is not as big as it could have been," Halliday said, adding the impact on earnings was likely "not disastrous".

Spanish airline Iberia posted a record operating loss last month, hit by declining air travel and underscoring challenges facing the industry as the airline seeks shelter in a merger with BA.

Iberia is seeking strength in size through its planned merger with BA to create the world's third-largest airline by revenue. The two airlines are expected to seal a definitive merger deal in the coming weeks.

Halliday said he expects further industry consolidation, whether it be in the form of alliances or takeovers. British Airways is in principle interested in takeovers but currently has its hands full with the Iberia merger and its trans-Atlantic alliance plans.

British Airways is working on a tie-up with oneworld partners American Airlines, Iberia, Finnair and Royal Jordanian that will let the companies coordinate schedules and pricing, operating as a single firm on issues like marketing and capacity.