BA to cut spending by one fifth

The economic downturn has hit demand for air travel

British Airways says it has cut its capital spending for the financial year 2009/10 by one fifth as it tackles the economic downturn and fewer passengers.

The airline said it had cut spending by 20% to £580m ($952m) from £725m, and had lengthened its schedule of orders for 12 Airbus A380 aircraft.

It comes as BA also announced a 5% drop in passenger traffic for June.

Last month BA said 800 staff offered to work for nothing for up to a month as the airline looks to cut costs.

'Challenging' conditions

BA said the delivery schedule for the first six Airbus A380 aircraft "has been extended by an average of five months" with delivery due in 2012.

It added: "The schedule for the remaining six A380s has been extended by an average of two years with the final aircraft arriving in 2016."

Referring to its June figures, BA said: "Market conditions continue to be very challenging with trading at levels well below last year.

"However, on an underlying basis, both premium and non-premium volumes and seat factors have now been stable for more than three months."

Acas talks

A June 30 deadline set by BA management for unions to agree a cost-saving package passed without agreement.

BA has asked the conciliation service Acas to intervene in a bid to reach a deal with unions on jobs and pay, as talks between it and the Unite and GMB unions over cost savings at the airline have so far failed to reach agreement.

The firm is looking for 3,000 redundancies among crew and administrative staff.

Another 4,000 employees are taking unpaid leave, 1,400 people have volunteered to work part-time, and a further 740 overseas workers have also agreed to the cost-cutting measures.

The airline had put the proposal to 40,000 staff.

Acas has said it would be convening a meeting next Wednesday so that negotiations could continue.

Meanwhile, thousands of BA workers will hold a meeting on Monday to hear details of the negotiations from union representatives.