BA blamed high oil prices for cutting back the underlying profit margin it must achieve for chief executive Willie Walsh to realise the full potential of a bonus worth up to £1.1million in shares.

BA’s annual report, published yesterday, also revealed the maximum annual cash bonus Walsh could make had been increased from 100 per cent to 150 per cent of his salary, or £1.1million.

Walsh did not take his ann­ual bonus this year because the  Heathrow Terminal 5 opening proved such a fiasco.

BA joins a growing list of firms reducing long-term bonus targets, including Halifax owner HBOS, which has subsequently launched a £4billion rights issue, and high-street retail chains Next and Marks & Spencer.

The M&S cuts proved particularly controversial — it was already under fire from shareholders over a decision to promote Sir Stuart Rose from chief executive to a dual role of executive chairman this July.

A BA spokesman said its remuneration committee had decided to cut the targets because high oil prices made it harder for the company to hit profit margins.

Profit margins for an initial tranche of shares to mature were scaled back from 8 per cent to 5 per cent. Those for the full award to mature were reduced by 1 per cent to 10 per cent.

The spokesman said analysts expected BA profits to fall sharply this year. The annual cash bonus level was increased to bring it in line with others in the industry. 

Walsh can cash in on the shares after three years.

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