British Airways sees UK market return mid-2010-press

FRANKFURT, Oct 13 (Reuters) - The airline sector has reached a trough but British Airways (BAY.L) does not expect the UK market, its most important one, to recover until mid 2010, the company's top executive told a Swiss newspaper.

Willie Walsh told Finanz und Wirtschaft in an interview to be published on Wednesday that he was more cautious than the British government, which expects the economy to recover by year-end, because the airline sector usually lags the general economy.

"We have reached the lowest point. Demand has stabilised," Walsh said.

"But a recovery can not be identified yet," he added.

Air traffic demand is recovering from the slump caused by the economic downturn but the industry remains well away from a return to profit, the International Air Transport Association (IATA) said late last month.

IATA said it expected a loss of $11 billion for the industry in 2009 and a $3.8 billion loss in 2010. [ID:nLT509941]

Walsh also told the paper that merger talks with Iberia (IBLA.MC) were ongoing and making progress and also said that the airline would likely cut more jobs.

"Without a question, we need to become more efficient," Walsh said. (Reporting by Nicola Leske; Editing by Jon Loades-Carter)