BA to axe 500 jobs as 12 regional routes go

British Airways is to axe a further 500 jobs and withdraw from 12 loss-making routes as part of an overhaul of its regional airline operations.

The news came as bmi british midland, the country's second biggest scheduled airline, revealed it plunged to a £12m loss last year and warned that it expected a similar deficit this year.

The cutbacks at BA will result in an 8 per cent reduction in seat capacity and a slimming down of the aircraft fleet and will generate £20m of cost savings a year by 2004. The routes being axed include Cardiff to Dublin, Edinburgh and Glasgow; Plymouth to Cork and Dublin; Southampton to Frankfurt and Belfast to Sheffield.

The latest job cuts follow last month's "future shape and size review" of BA's mainline services involving 5,800 redundancies and £600m of targeted cost savings.

Bmi blamed its loss on the events of 11 September, which it estimated had cost it £35m in revenues and reduced passenger numbers by 400,000.

Sir Michael Bishop, bmi's chairman and 60 per cent shareholder, said 2001 had been a "defining year for the aviation industry" adding that trading conditions continued to be "extremely challenging".

However, he said there was no danger of the airline going under or needing to be rescued by its two minority shareholders, SAS and Lufthansa, or by other members of the Star Alliance. "There is no question of us needing to be bailed out or having to sell off further shares," he said. Sir Michael added that despite the difficult winter, bmi had emerged in a robust condition with £100m of cash on its balance sheet.

Passenger numbers fell 5.2 per cent last year to 6.7 million, despite the launch of new transatlantic services from Manchester, and Sir Michael said it would take until 2003 before bmi returned to pre-11 September growth levels.

At the pre-tax level, bmi reported a £12.4m profit for 2001 compared with an £8.2m profit for the previous year on sales up 2.4 per cent to £757m. But this was largely the result of a £72m exceptional profit from the sale of its airport handling business to Go-Ahead.

Sir Michael said bmi had budgeted for a similar operating loss this year as last. "Despite the early signs of the shoots of growth and some recovery in volume, yields continue to be under pressure and we do not anticipate that this trend will change significantly for the remainder of the year," he added.