The automated system for reprocessing and re-screening delayed bags in Terminal Five can't be used, Morton said. This means "bags are having to be transported to other sites at or near Heathrow to be re-screened manually before being brought back to be loaded on flights to their destinations."
"This process is extremely time-consuming," she said.
A spokesperson for BAA, the airport company that owns the baggage system in Terminal Five, said in a statement that it is working "to resolve baggage issues and to deliver a good service to passengers."
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The airline's image suffered yet another knock when news of its initial offer of $200 compensation for passengers on cancelled flights hit the headlines.
Under EU laws, all airlines traveling to and from Europe are obliged to pay the full costs of a passenger's overnight stay in the event of flight cancellations.
In an interview with ABC News, Jason Wakeford of the Civil Aviation Authority said that the organization "has written to BA about media reports that passengers aren't being offered what they are entitled to under EU legislation."
"Passengers should receive compensation if a flight has been cancelled, free phone calls and refreshments if their flight has been delayed and accommodation if their flight has been delayed overnight," he added.
Morton said that British Airways intends to "compensate passengers for cancelled flights, hotel accommodation, food and drink and transport costs in accordance with the EU regulations."
The airline's woes will cause a sizeable cut in its projected revenue for this year.
Analysts at Citibank released a note saying that the airline's revenue could be reduced by as much as $49.7 million, after company shares fell by 5 percent today following Goldman Sachs' "sell" rating on them.
