BA slashes spending as passengers fall

By John Bowker

LONDON (Reuters) - British Airways (BA) (BAY.L) 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 for the year to the end of March 2010, down from 725 million, and pencilled 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 stabilised in recent months, while Irish budget airline Ryanair (RYA.I) 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.