British Airways announced plans last night to cut its spending by one fifth and to cut capacity as it tries to preserve cash.

BA, which six weeks ago reported a record loss of £401 million, also confirmed that it was looking to reduce its workforce by the equivalent of 3,700 full-time jobs this year. That is on top of the 2,500 posts cut by BA, which remains in talks with unions, between June last year and this March.

The airline said that it would cut capacity from April to October by 3.5 per cent, up from the intended 2.5 per cent reduction, and that it would cut its winter schedule by 5 per cent, instead of the previously intended 4 per cent. It added that it expected a five-month delay in the delivery of its first six Airbus A380 aircraft, although they will still be delivered in 2012, while arrival of the remaining six on order would be delayed by two years until 2016.

BA also said that it would ground its remaining three mainline Boeing 757 aircraft next summer and a further three Boeing 747-400s in winter next year.

In all, the airline said that capital expenditure during the current financial year, which ends next March, has been cut from £725 million to £580 million, adding that it was likely to remain at this level for 2010-11.

The news came as BA, which last week revealed that about 7,000 staff had volunteered to work shorter hours or take unpaid leave in support of its cost-reduction programme, reported that passenger numbers in June were down 3.8 per cent on the same month last year.

But in “premium traffic” — the first and business-class where BA makes most of its profits — the numbers were down 14.9 per cent. Non-premium flyers declined by 1.3 per cent. The load factor, an indicator of how many seats have been filled with paying passengers, was 79.6 per cent, against 81.4 per cent in June last year.

The company added: “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.”

BA was the biggest climber on the FTSE 100 share index yesterday, its shares rising 6½p, or 5.5 per cent, to close at 121.83p.

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