British Airways to severely cut capacity, delay new A 380 aircraft and mothball others
Fri Jul 3, 3:09 pm ET

LONDON – British Airways PLC announced Friday it will ground aircraft, slash seat numbers and postpone taking delivery of a dozen new Airbus A380 superjumbos as it faces a recession-driven decline in passengers.

The airline said it carried 2.93 million passengers in June, 5 percent fewer than in June 2008.

BA said that in response to the "challenging economic conditions" it was cutting its summer capacity by 3.5 percent, rather than the originally forecast 2.5 percent. Capacity for October through March 2010 is expected to be down by 5 percent.

The airline said it would ground three Boeing 757 aircraft in mid-2010, and three Boeing 747-400s the following winter.

BA also said it was postponing by an average of five months delivery of its first six A380s, the first of which is still due to arrive in 2012. Delivery of a second batch of six is being delayed by an average of two years, with the final plane due to arrive in 2016.

BA's planes were 79.6 percent full last month compared with 81.4 percent a year earlier. The steepest falls were in first- and business-class traffic and on routes between London and Asia.

"Market conditions continue to be very challenging with trading at levels well below last year," BA said in a statement. "However, on an underlying basis both premium and non-premium volumes and seat factors have now been stable for more than three months."

The airline is seeking to cut 3,500 jobs and bring in a pay freeze as part of a cost-cutting package. Talks with unions have failed to reach agreement, and more negotiations are planned next week with a government-backed mediator.

British Airways, which employs 40,000 people, is looking to cut 2,000 flight attendants and 1,500 ground workers.

The airline's shares rose 6.5 pence to 125.5 pence Friday on the London Stock Exchange.