Shareholders will not be paid dividends and managers will not receive bonuses because of the losses, the airline said.
BA also said that there would be no guidance for the current year due to difficulty forecasting sales.
Willie Walsh, the BA chief executive, said there was no immediate sign that things would pick up.
"The prolonged nature of the global downturn makes this the harshest trading environment we have ever faced and, with no immediate improvement visible, market conditions remain challenging," he said.
"It seems the only way forward for many airlines is to consolidate and it couldn't come sooner for BA"
Manoj Ladwa, a senior trader at ETX capital
The results sent BA's share price sliding more than six per cent in early London trade, but by the afternoon it had recovered and was just 1.41 per cent down.
"It doesn't matter how you look at it, these are dreadful figures from British Airways," Manoj Ladwa, a senior trader at ETX Capital in London, said.
"Although the market did expect the economic environment and recent high oil prices to impact performance, investors will question whether the company can stay competitive in the current market place.
"It seems the only way forward for many airlines is to consolidate and it couldn't come sooner for BA."
British Airways is currently in merger talks with Spanish rival Iberia, as well as seeking a tie-up with American Airlines.
Emirates, one of the world's fastest growing airlines, also reported a massive drop in profits over the last year on Friday, but was able to retain a healthy cash balance.
The Dubai-based airline made a net profit of $286m in the last financial year, down from $1.4bn the year before.
HH Sheikh Ahmed bin Saeed Al-Maktoum, chairman and chief executive of the airline, said: "We have returned our 21st consecutive year of net profit, and although it is a 72per cent decrease on the previous year, under the circumstances this is a satisfactory result."