The loss, BA's largest annual deficit since it was privatised in 1987, was less than the 590 million pounds ($846 million) shortfall predicted by analysts, and follows last year's 401 million loss.
BA said its revenues for the year to the end of March fell 11 percent to 7.9 billion pounds, offset by costs 1 billion pounds lower, and predicted a return to breakeven next year as a slump in travel caused by the global economic downturn eases.
"We think we can break even on the pretax profit level in the next full year," Chief Executive Willie Walsh told reporters on a conference call.
"Long-haul premium traffic has recovered and reductions in short-haul traffic have eased. Market conditions are showing improvement from the depressed levels in 2009/10."
The results were affected by cabin crew strikes in March, which cost the carrier 43 million pounds and are due to continue next week, but do not include the 100 million pounds hit it took from the ongoing disruption caused by the eruption of an Icelandic volcano last month.
"I admire BA's optimism but even if you ignore strikes, volcanic dust and the state of the economy I'm not at all confident that the slight improvement we have seen will result in break even or that the market is on the up," said Howard Wheeldon, a senior strategist at BGC Partners.
"I think we're in for a very long flat period at best."
Permanent Change Needed
BA shares have risen 10 percent in the last year but those gains have disappeared in the last week after a court said the airline's cabin crew could press ahead with further strike action in the coming weeks.
Walsh said returning the business to profitability required "permanent change across the company" and that it was "disappointing that the Unite union fails to recognise that".
Unite said BA staff would start three five-day strikes next week unless the pair can settle a dispute over pay and terms.
The dispute has grown increasingly bitter with some analysts saying Walsh's firm stance has effectively broken the industrial action, or at least put unions on the back foot. Unite has also accused Walsh of trying to break the union, which has 97 percent of BA cabin crew as members.
If the action goes ahead, BA has said it will operate a full schedule at London's Gatwick airport, a full schedule at London City, some two-thirds of long-haul flights at London Heathrow and around half of the airport's short-haul programme.
Iberia Cost Savings
BA said its merger with Spain's Iberia, which is expected to generate 400 million euros ($496.6 million) a year in cost savings, would be complete by the end of 2010.
It also said it hoped plans to form a commercial alliance with American Airlines would be approved by the U.S. Department of Transportation and the EU by this summer.
BA, Europe's third-largest carrier, said it had managed to cut costs by around 1 billion pounds in its last fiscal year, thanks, in part, to a fuel bill 600 million pounds lower.
Passenger traffic fell 3 percent during the year, with first and business-class travel -- the most profitable part of its passenger business -- falling in nine of the 12 months.
Air France-KLM predicted a return to breakeven this year after it posted a record full-year operating loss of 1.285 billion euros.
