March 29 (Bloomberg) -- British Airways Plc canceled 67 flights today and said it had accumulated a backlog of about 15,000 pieces of luggage, as disruptions at London Heathrow airport's new Terminal 5 extended into a third day.

The carrier abandoned 19 percent of its flights today, to short-haul destinations including Rome, Paris and Budapest, as problems persisted with baggage handling. Europe's third-largest carrier tomorrow plans to operate 294 of 331 flights, or 88 percent, from Terminal 5, according to a British Airways spokeswoman who declined to be identified, citing company policy.

``This will clearly go on for days,'' said Howard Wheeldon, an analyst at BGC Partners LP in London. ``The potential for lasting damage to British Airways is far greater than anything that has gone before.''

British Airways, based in London, has canceled more than 200 flights since the terminal opened March 27, after computer log-on failures for baggage handlers and delays at staff car parks sparked turmoil at the airport, Europe's busiest. The number of flights canceled today fell by six from 73 yesterday.

The airline will compensate passengers whose flights have been disrupted and hasn't set a limit on the payments it would make to customers who had to book overnight hotel accommodation, according to a company spokeswoman, who asked not to be identified.

Undelivered Luggage

The London-based Times reported earlier today that the carrier had told passengers delayed on March 27 that they would be able to claim a maximum of 100 pounds ($200) for two people sharing a hotel room.

About 6 percent of the baggage British Airways has handled in the past three days has yet to reach its owners, according to a company spokeswoman. The carrier is already Europe's worst airline for lost luggage and the second-worst for delayed bags, according to the Air Transport Users Council.

Terminal 5 took two decades to plan and build at a cost of 4.3 billion pounds as the U.K. government battled campaigners who said the building would only add to congestion at Europe's busiest airport. British Airways has said the terminal will ease journeys and help retain passengers disillusioned with Heathrow's overcrowding.

British Airways fell 7.25 pence, or 2.9 percent, to 240 pence in London trading yesterday. Spanish builder Grupo Ferrovial SA, which owns Heathrow operator BAA Ltd, declined 1.09 euros, or 2.3 percent, to 46.37 euros in Madrid.

`Some Problems'

``While there are still some problems to overcome we are planning to operate a larger proportion of our flying program,'' British Airways Chief Executive Officer Willie Walsh said in a statement yesterday.

All long-haul services were scheduled to operate as normal, the airline said.

Heathrow is not unique in suffering problems after adding capacity. Six people died in May 2004 when a roof at Paris's Charles de Gaulle collapsed onto a footway, while passengers at Madrid's Terminal 4 were still losing luggage nine months after the building opened in February 2006.

Terminal 5 boasts 60 aircraft stands and 17 kilometers (10.6 miles) of baggage conveyors in a system designed to handle as many as 12,000 bags an hour. Over 400,000 man-hours went into developing the system's computer software.

Web Site, Phone Number

Walsh has blamed ``Heathrow hassle'' for dissuading people from traveling with British Airways when he cut the carrier's full-year sales forecast last August. Before March 27, Heathrow was handling 68 million passengers a year in buildings meant for 45 million. T5 has expanded capacity by 30 million to 75 million.

British Airways assumed control of the building from BAA in September. The carrier started what it described as ``exhaustive'' customer trials of the building that month, with volunteers invited to play the part of travelers.

Rivals of British Airways have been quick to take advantage of the chaos at Terminal 5. Flybe, a U.K. low-cost airline, yesterday sent customers an e-mail encouraging them to use its services at airports including London Gatwick and Birmingham, in central England.

British Airways advised passengers to visit its Web site http://www.ba.com or, within the U.K., to call +0800-727-800 for information regarding the status of flights from Terminal 5.

To contact the reporters on this story: Steve Rothwell in London at srothwell@bloomberg.net

Last Updated: March 29, 2008 14:58 EDT