For a decade, management writers casting about for British companies to call "world class" have usually come up with two names: Marks and Spencer and British Airways.

Last week M&S announced annual profits down almost 50 per cent. This week BA unveiled pre-tax profits down 61 per cent to £225 million sterling (€341 million). Has another of Britain's most respected companies, and probable alliance partner of Aer Lingus lost its way?

M&S's problems were widely attributed to arrogance. The retailer had stopped worrying about what its customers wanted. There is certainly no shortage of detractors ready to say the same of BA. "They have an arrogant attitude," says Anne-Marie Sorensen, Swedish sales director of Carlson Wagonlit Travel, one of the world's leading corporate travel agents.

Ms Sorensen says BA's flight attendants remain courteous and professional. It is the ground-based staff who let the airline down. "The sales people and the service people don't really care," she says.

A London-based investment banker says: "The thing that's a bit irksome about BA is that when they have exercises like closing the gates to make sure the plane leaves on time, their people seem to implement them with glee and zeal. Their competitors don't seem to be quite as officious."

Such comments are likely to cause some alarm to Aer Lingus, whose senior executives stress that their ultimate alliance partner (or partners) must be the right fit - both strategically and culturally. Aer Lingus has spent considerable time and millions of pounds building a brand, which it believes portrays it as a caring, professional, courteous airline.

Aer Lingus is due to begin talks with British Airways in July, once given clearance by the Government, with a view to a strategic alliance. It should eventually lead to the Irish airline linking up with American Airlines as well, another key player in the OneWorld alliance.

In the years after British Airways' privatisation in 1987, it was very different. Long nicknamed "Bloody Awful", BA became a case study in how to become a successful service business. The airline introduced innovations in business class service that were copied worldwide.

So what has gone wrong? First, not everyone agrees everything has gone wrong. Among airline executives, particularly in the US, BA is still widely admired.

Part of the problem is that airlines are unpopular almost everywhere. Flying millions of passengers around the world in the face of strikes, airport congestion and air traffic control problems is a difficult task.

Many passengers feel let down by delays, lost luggage and overbooked aircraft. In the US, both houses of Congress are considering legislation to limit what they see as the airlines' unreasonable behaviour.

Many airlines are also unpopular in their home markets simply because they are so powerful there. And BA has effective opponents. Rivals such as Virgin Atlantic and EasyJet, the low-cost carrier, have made opposition to BA a central feature of their marketing. The revelation in the early 1990s that BA had run a "dirty tricks" campaign against Virgin still affects the British public's view of the airline.

Some BA employees regard the personality of Robert Ayling, the chief executive, as another problem. Mr Ayling's private warmth often fails to come across in meetings with larger groups, although his performances have improved considerably since his acrimonious clash with cabin crew during their three-day strike in 1997.

His decision to replace the Union Jack on BA's tail-fins with ethnic art from around the world has attracted strong criticism in Britain, although many foreign passengers - the majority of the airline's customers - seem to like the change.

BA is working to regain respect. All 64,000 employees are going through a one-day training session called Putting People First Again - an implicit acceptance that people have not always come first in recent years.

It is also introducing business class seats which recline to become beds, an innovation likely to welcomed. But BA's decision to concentrate on first and business class travellers at the expense of economy customers has its dangers. "The majority of people don't travel first or business class," says Charles van Berckel, director of Farside Event Management, an organiser of international conferences.

"Everybody flies today and companies don't have the resources to send everybody business class. BA has concentrated on the upper end of the market and has done that quite well," he says.

"But I've lost confidence in their ability to provide a consistent level of service in the economy section.