British Airways plans to cut its workforce by more than a tenth as it struggles with mounting losses. The airline said yesterday that 4,900 jobs would be lost — about 12 per cent of staff — by March.

This is 1,200 higher than the target BA set this year and comes after it announced a £292 million loss in the six months to September 30.

Analysts said that the most worrying aspect of this loss was that summer is traditionally the most lucrative time for airlines when they bank cash to get them through the quieter winter months.

BA made a profit of £52 million in the same period last year and £593 million two years ago. The weak first-half performance suggests that BA may be on track to beat last year’s record losses of £401 million and the airline may struggle to return to profitability before 2011.

Nick Cunningham, aviation analyst at Evolution Securities, said: “We see a return to profitability in 2011, but only just and only if cost-cutting plans succeed.”

The impact of the recession on BA was revealed as the airline reported that revenues were down 13.7 per cent in the past six months.

Willie Walsh, the chief executive, said: “The challenge to the business and to the industry is the big decline in revenues we are seeing. We will see a fall of over £1 billion in revenue this year and that is largely on the back of the recession as business travel is less and average fares have come down.”

The revenue fall has been most severe in BA’s British market, which was down 20 per cent in the first half. This compares with the North American market, which BA said had been flat.

The airline has begun a cost-cutting programme to rebalance its books and has reduced overheads by £400 million in the first half. It is planning further cuts and wants to save £140 million a year from its cabin crew budget. This has brought the airline into dispute with its 14,000 crew, who are to be balloted on strike action by their union.

The trade union Unite sought an injunction on Thursday to prevent BA from imposing working practice changes on the cabin crew from November 16. The injunction was not granted but BA faces a case in the High Court over whether it has breached employees’ contracts.

The airline said yesterday that it hoped the job cuts it was planning would be voluntary and would be achieved through redundancy, part-time working and natural wastage.

One positive for the airline was that it had had strong ticket sales to leisure passengers, particularly those travelling in premium economy or business class. To take advantage of this robust market, BA is offering six new leisure destinations this winter, including Las Vegas and Montego Bay in Jamaica.

“What we have seen is that long-haul leisure has remained strong,” Mr Walsh said. “As a result we have looked at this as a new opportunity to add destinations to the network.”

Further good news came from the traffic statistics last month. These showed that passenger numbers had fallen by only 1.9 per cent compared with the previous October. Premium passengers were down 1.4 per cent. For much of the past year, BA’s premium traffic has been falling by 15 per cent to 20 per cent a month. This cheered investors and BA was the biggest riser on the FTSE 100. The shares went up by 12½p, or 6.7 per cent, to close at 198¾p.

Counting down

£292m loss for the six months to September 30

4,900 jobs to go by March

20% fall in revenue on domestic routes

1.9% decline in passenger numbers in October

12.2% decline in yields in October

198.75p BA closing price last night, up 12.5p

Source: Times research

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