British Airways plans cuts

British Airways Plc, Europe’s third- largest airline, will extend capacity reductions, ground planes and delay deliveries of superjumbo aircraft as demand for air travel shows scant signs of rebounding amid the recession.

British Airways will slash the number of available seats in its summer schedule, which runs from April to October, by 3.5 percent, up from a previously planned 2.5 percent. Capacity cuts in the winter schedule will be increased to 5 percent from 4 percent, the London based-carrier said today in a statement.

The airline will delay deliveries of A380 double-decker planes from Airbus SAS and park Boeing Co. 757s next year as it seeks to conserve cash. BA also will reduce capital spending by 20 percent to 580 million pounds ($948 million) in the fiscal year ending March 2010.

“The setback in demand for air travel has been quite significant,” Group Treasurer George Stinnes said in a conference call with reporters. “Demand we expected for 2012 when we ordered these airplanes will arrive later.”

Deliveries of the first six A380s will be extended by an average of five months, with the first delivery still due in 2012, the airline said.

British Airways advanced 6.5 pence, or 5.5 percent, to 125.5 pence in London trading. The stock has slumped 30 percent this year, paring BA’S market value to 1.45 billion pounds.

The airline is seeking to eliminate the equivalent of 3,700 jobs this fiscal year to help weather the recession, it said today. BA called in a state mediator this week after talks with unions broke down.

The airline also said today that traffic, or the number of passengers multiplied by the distance flown, fell 3.8 percent in June compared with a year earlier. First- and business-class traffic, which is most profitable, slumped 15 percent in the month, with economy-class travel down 1.3 percent.

Stinnes said that although traffic declined, travel demand has become more stable. “Some of this volatility has gone away.”

Source: Bloomberg

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