British Airways' shares lost altitude yesterday after the airline said its passenger traffic dropped by 2% in March and the chaos surrounding the opening of Terminal 5 at Heathrow Airport had cost it around £16m so far.

BA also reported a 5% plunge in premium traffic and a 2.3% fall in non-premium business.

However, Europe's third-biggest airline said the passenger traffic figures had been complicated by the early Easter this year and changes to school holidays, which had reduced the number of business travellers.

"Underlying conditions in long-haul premium traffic continue to be strong, while short-haul premium and long-haul non-premium continue to be weak," BA stated.

Passengers to the Asia-Pacific region were down 6%. The company reported a 5.7% fall in passengers flying to Africa and the Middle East.

BA's load factor - a measure of how well it has filled its planes - decreased by 0.9 percentage points to 75.4 %.

The high-profile opening of Terminal 5 last month has turned into a public relations disaster, with hundreds of flights cancelled and tens of thousands of pieces of luggage going missing.

"We would expect next week to get back to a full programme," said George Stinnes, BA's head of investor relations.

The airline said the disruption had affected its short-haul routes the most. BA was forced to cancel about 300 flights, equating to 0.2% of capacity.

"The financial impact of these events is estimated to be around £16m, reflecting all costs associated with the disruption and lost revenue opportunities," a BA spokesman said.

BA shares had shed 9.25p, or 4.3%, to 238.25p by the close of London dealing.

Aviation industry analysts at Deutsche Bank were sceptical that the airline had solved all of the problems at Terminal 5, saying that they expected adverse conditions would persist into the summer and cost around £150m in total.

Meanwhile, Ryanair, BA's discount-fare rival, had more positive news, saying passenger numbers rose by 19% in March, just below than the 20% increase reported in February.

The firm said 4.48 million passengers flew with the carrier last month, up from 3.77 million a year earlier, making it almost 51 million for the 12 months ended March 31.

The load factor was up to 79% in March from 78% a year ago. The annual figure now stands at 82%.

Last week, the low-cost airline said it will be reviewing all of its major costs during the coming weeks because of high fuel charges. The price of crude oil has risen above $100 a barrel and economists said yesterday they did not expect oil prices to pull back too much in coming weeks.

Ryanair's current $68-per- barrel fuel hedges expire from April 1.