British Airways reduces flights and accelerates cost cutting measures

British Airways today announced its package of measures in response to the impact on business from the conflict in Iraq.

British Airways said that following the actual and anticipated downturn in passenger traffic, the airline is to implement a reduced flying programme and an acceleration of its Future Size and Shape restructuring programme.

The measures include:

· An overall capacity reduction of four per cent in April and May, involving reduced frequencies and the use of smaller aircraft.

· The Future Size and Shape programme’s overall manpower reduction target of 13,000 by March 2004 will be accelerated to September this year.

· An extension of the company’s unpaid leave scheme for staff.

· A review of all capital expenditure and external spend.

Chief executive Rod Eddington said today: "There are clearly tough times ahead and experience has shown us that conserving cash is critical at these times.

"We have had the opportunity to plan our response on this occasion and go into this downturn a leaner, fitter company. Before today’s adjustments to our flying programme, we had already reduced our capacity by 20 per cent in the last two years and reduced our manpower by 10,000.

"We are still assessing the impact on passenger demand but the industry has been feeling the effects of war for some weeks now. However, we are in good shape with more than £2 billion in cash and committed facilities available and we will survive this conflict."

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· The reduced flying programme on the North Atlantic will include the suspension until the end of May of one of seven London Heathrow-JFK New York daily return services; the cancellation of one of two daily London Heathrow-Chicago return services until April 8 and the delayed introduction of extra services to London Heathrow-Newark New York, London Heathrow-Toronto and London Gatwick-Houston. The changes represent a reduction of capacity on the North Atlantic of 6 per cent.

· The reduced flying programme in the Middle East foresees the continued suspension of services to Kuwait in the short term and 10 services a week to Dubai reduced from a double-daily service. A daily service to Tel Aviv will recommence from Friday, March 28, following a temporary suspension of the double-daily service. The changes represent a 26 per cent reduction in capacity to the Middle East.

· Manpower reductions since August 2001 totalled 9,740 as of February 28 ,2003. The previous stated target of a 10,000 reduction by the end of this month will be achieved. The remaining 3,000 of the overall 13,000 target, originally to be achieved by March 2004, will be achieved by the end of September.