Aviation experts said British Airways could lose up to £40m sterling after wildcat strikes paralysed its operations at Heathrow Airport today.
The forecasts equate to 8% of BA's forecast annual profits of £520m this year after it was caught in the crossfire of a row between its catering contractor and staff.
BA staff who took part in an unofficial strike that has left thousands of passengers stranded at Heathrow have returned to work this evening.
About 1,000 ground staff walked out in sympathy with workers sacked by BA's in-flight meals supplier Gate Gourmet.
It led to all BA Heathrow flights being cancelled until 2000 BST. Thirty one flights will take off later tonight.
Tens of thousands of passengers have been left stranded because of the dispute, which caused travel chaos in one of the busiest weeks of the year for the airline industry.
As well as refunds and the loss of flight revenues, BA has been forced to pay for hotels for passengers left stranded when its baggage handlers left their posts in sympathy with the sacked workers of Gate Gourmet. Airline staff have been stuck abroad during the busiest summer holiday season and analysts warned that the company could also suffer long-term damage to its reputation from the strike.
The potential blow to profits left BA shares 0.8% lower this evening and provided the company with a setback to a recent recovery that has seen it restored as the world's most profitable airline. A spokesman for BA said it was too early to put a figure on the financial impact of the strike, which has seen all flights cancelled until 8pm this evening.
The dispute comes at a time when the company is under pressure from record oil prices. Last week, BA warned that its fuel bill would be £75m more than previously thought and £525m higher than last year because of the recent rise in the cost of crude oil.
BA has become the world's most profitable airline after reaping the benefits of a restructuring programme that included thousands of job losses and cutbacks of unprofitable routes. This overhaul has taken place against a backdrop of the Iraq War, the Sars virus and the September 11 attacks in the US.
BA said a week ago that passenger capacity in July was at a record high, but the volatility of so many external factors such as oil prices made accurate forecasting difficult.
The walkout is a blow for chief executive Rod Eddington, who is a month away from handing over control to former Aer Lingus boss Willie Walsh. The chaos wiped £35m off the value of the company in trading yesterday and today's share price fall represents a similar loss to investors.
Meanwhile, the catering company at the centre of the Heathrow dispute has warned it may not survive without a restructuring of the business.
Gate Gourmet UK lost £22m in 2004 and said this week that it could lose £25m this year without changes, including amendments to working practices.
The company, which has been owned by US investors since 2003, suffered a major blow in March when it lost a contract with a key customer, Virgin Atlantic.
The UK arm of the global Gate business said it had made non-labour related cost reductions and renegotiated contracts, but needed a £14m reduction in direct labour costs for the company to break even in the next 18 months and safeguard its future.
Gate UK, which has seven units in the UK, said it wanted to remove outdated and inefficient practices, which it said included the refusal of staff to help colleagues on other work lines during times of peak production.
The global Gate Gourmet company, which employs 22,000 people worldwide, is headquartered at Zurich International Airport and produces 534,000 meals a day. It has seen declining profits for the past five years.
