Will struggling British Airways cut spending?

Troubled British Airways said Friday that it would slash capital expenditure by one fifth in the current financial year after posting another sharp drop in monthly passenger numbers.

"Market conditions continue to be very challenging with trading at levels well below last year," the struggling airline said in a trading update.

"In response to the challenging economic conditions British Airways has reviewed its business plan.

"Forecast capital expenditure has been reduced from 725 million pounds to 580 million pounds for 2009-2010 and is likely to remain at that level in 2010-2011."

The airline also announced it carried 2.93 million passengers last month, 4.9 percent fewer than in June 2008.

And BA repeated that it wanted to slash 3,700 jobs in the current financial year, which runs until March 2010. It has already axed 2,500 jobs worldwide over the past year.

BA also revealed that it would delay the delivery of its fleet of Airbus A380 superjumbos and announced more reductions to its summer 2009 and winter 2009-2010 flight schedules.

"The delivery schedule for the first six Airbus A380 aircraft has been extended by an average of five months with the first delivery still due in 2012," the carrier said.

"The schedule for the remaining six A380s has been extended by an average of two years with the final aircraft arriving in 2016."

In May, BA had reported an annual loss of 375 million pounds, blamed on plummeting demand for tickets as well as high fuel costs.

After diving into a financial loss, BA asked staff to work for free, while promising that chief executive Willie Walsh and finance director Keith Williams would forgo their July salaries.

Agencies

Air India announces fare cut up to 82pc

A day after Jet Airways reduced fares on domestic routes, state-owned operator Air India on Tuesday announced fare cut up to 82 percent in at least 20 sectors, mostly on metro routes, a senior airline official said.

"The new fare cut comes into effect today (Tuesday). We have cut fares on 20 sectors by up to 82 per cent. This will largely benefit passengers on metro routes," an airline spokesperson told reporters.

India's leading private air carrier Jet Airways Monday reduced fares on its domestic routes by up to 40 percent with immediate effect.

Another leading carrier, Kingfisher Airlines, Sunday announced fare cut from Jan 1. However, it has not announced the quantum of fare cut.

Low cost carriers are also expected to follow suit, said an industry official. The fare cuts comes in the wake of slackening demand in the post-peak season and continued decline in fuel prices.

Over the past four months, there has been a sharp decline in aviation fuel prices. While some air carriers earlier this month reduced the fuel surcharge on the ticket price by Rs 200 to Rs 400, they did not touch the base fare.

Oil companies have reduced aviation fuel prices seven times since September. The fuel is now sold at Rs 32,691.28 per kilolitre in Delhi after prices were slashed by Rs 4,208.37 in the first week of December.

Source: Airlines