Image caption Mr Walsh said that without change, BA would shrink

The chief executive of British Airways, Willie Walsh, has turned down an annual bonus of shares worth £334,000, the airline has said.

It is the second year in a row that Mr Walsh has turned down a bonus.

Mr Walsh's salary remains at £735,000, although he earned £674,000 last year after voluntarily giving up July's pay as part of cost-cutting measures.

The Unite union, which is locked in a dispute with BA, said there would have been uproar if he had taken his bonus.

Analysis Willie Walsh needs to rebuild relations with the unions at BA if he wants to receive a full bonus next year. The pay committee at the airline have set him and other directors the challenge of "improving industrial relations", as a specific target for assessing their eligibility for a bonus in 2010/2011. The task may be tough given that there have been 15 days of strikes by cabin crew so far this financial year, and Unite is threatening further action over the summer. Other strategic targets set for executive directors include reducing BA's pension deficit and further progress in the planned merger with Iberia. If Mr Walsh hits all the targets he will double his annual pay of £674,000.

It added: "There should be no bonus and no mega-pot of shares until BA sorts the cabin crew dispute."

The long-running row, which had led to 22 strike days this year, began over staffing levels and working conditions. But the Unite union, which represents BA cabin crew, says the main outstanding grievance now is the removal of travel concessions for those who went on strike.

Cabin crew returned to work on Thursday after the last of a series of five-day strikes.

On Wednesday, Unite confirmed that it was preparing to ballot its members again on further strike action.

In BA's annual report, Mr Walsh said: "I regret that we found ourselves at loggerheads with very valued members of staff at a critical time.

"When we have had the chance to explain our proposals directly, many understand what our agenda is really about - to secure jobs in the airline and put the business on a footing where it can achieve the growth it needs to survive long-term.

"They understand that, without change, British Airways will just shrink and shrink and shrink."