BA announced cuts in its short haul programme for the winter and a slowdown in recruitment as the high price of oil continued to affect the airline industry.
Its chairman Martin Broughton said oil now accounted for 35% of the carrier's costs with the current annual £3bn bill £1bn higher than last year.
He told the BA's annual shareholders' meeting in London that th airline was "up to its neck in perhaps the biggest crisis the aviation industry has ever known."
He added: "I don't want anybody to be under any illusions that in the current operating conditions, it will be a considerable achievement for British Airways to break even this year."
BA reported pre-tax profits of £883m for the year ending March 31, 2008 but it said that each $1 rise in the price of fuel knocked £16m off those profits.
Willie Walsh, BA's ceo, said the cuts would be in frequencies on routes which generated less return rather than on suspension or scrapping of routes. No aircraft would be grounded and long haul routes would be unaffected.
The airline had planned to increase capacity this winter by 2.8% but it would now be about the same as last winter.
Mr Walsh said the airline could not save £1bn on non-fuel related costs so it would look at its whole operation to see where savings could be made.
This would mean a slowdown on recruitment and a rise in fares by a minimum of 4%.
June figures from BA showed a decline in passengers of 3.7%.
Mr Walsh said he had "no doubt" that the rise in energy and food prices was beginning to hit people.
He said the economic environment was "softer" than it was six months ago.
Full details of the BA cuts are due to be announced early next month.
* See BTE Analysis