LONDON, Nov. 8 (Reuters) – British Airways Plc fell to a worse than expected first-half loss and forecast annual revenue would be 1 billion pounds lower than last year, but said traffic volumes and yields had stabilized.

The airline, whose alliance with American Airlines and Spain's Iberia is being scrutinized by European and US competition watchdogs, on Friday reported a pretax loss for six months to end September of 292 million pounds ($482.4 million), while revenues fell 13.7 percent to 4.1 billion.

BA's pretax loss – impacted by higher debt levels, lower interest rates, a higher pension burden and restructuring costs of 48 million pounds -- compares to the pretax profit of 52 million pounds it made in the same period last year and expectations for a loss of between 235 million and 255 million in a Reuters poll of six analysts.

The airline said it would look to drive more costs out of the business in the coming months.

''Our revenues are likely to be about 1 billion pounds lower this year so we're determined to reduce costs further,'' Chief Executive Willie Walsh told reporters on a conference call.

He added that the airline was ''riding along the bottom'' of the downturn.

The global recession has battered the airline industry as consumers cut back on trips abroad and lucrative business class travellers fly less. BA has also been hit by growing competition from low-cost carriers and potential labor strikes.

The International Air Transport Association recently said it still expected airlines to lose $11 billion this year.

Walsh also said he was ''confident in the strength'' of BA's case to win US Department of Transportation approval for a sales tie-up with American Airlines and Iberia.