BA slashes spending as passengers fall again

By John Bowker

LONDON (Reuters) - British Airways (BA) (BAY.L: Quote, Profile, Research) said it had cut its spending plans by 20 percent for the current year as it prepared for a lengthy industry downturn and reported that passenger numbers had fallen again.

The carrier said it had reduced its capital expenditure to 580 million pounds ($951.9 million) for the year to the end of March 2010, down from 725 million, and penciled in a similar number for the following year.

The spending cuts included the deferral of orders for 12 Airbus A380 aircraft for up to two years.

"We have renegotiated a delivery schedule... the demand we expected in 2012 will now arrive later," BA head of investor relations George Stinnes told reporters, adding that the firm still expected to have 1 billion pounds in cash by March 2010.

BA shares closed the day up 5.5 percent at 126 pence a share, valuing the firm at 1.44 billion pounds.

The carrier, currently locked in talks with trade unions in a desperate bid to wring cost cuts from staff, said it carried 3.8 percent fewer passengers in June than in the same month last year, including a near 15 percent fall in premium, or business, traffic.

The company said its long-running falls in traffic had stabilized in recent months, while Irish budget airline Ryanair (RYA.I: Quote, Profile, Research) reported its latest rise in numbers -- up 13 percent for June to 5.84 million.

BA's load factor, a measure of how well it fills planes, was down 1.8 percent at 79.6 percent, while Ryanair's was up 1 percent at 85 percent.