Revamp at BA delayed as job loss fears mount

British Airways has delayed plans for a further radical pruning of its short-haul European operations, which is expected to result in more job losses and the withdrawal from unprofitable routes.

Rod Eddington, BA's chief executive, had asked the airline's "future shape and size" taskforce to come up with a blueprint by Christmas but it now appears that decisions will not be made until February at the earliest.

The BA board met last Friday to examine a range of options put forward by the five-strong taskforce of executives. They have now been asked to go away and refine their proposals.

The restructuring plan is likely to involve further redundancies on top of the 7,000 announced in October in the wake of the 11 September attacks but BA sources played down weekend reports that a further 10,000 jobs would be axed.

Among the options put forward but rejected by the BA board last week was the complete withdrawal from Gatwick. Although the overhaul of BA's European and domestic network is bound to involve further cutbacks at the airport, BA sources stressed that it remained committed to flying out of Gatwick.

The review is likely to result in a reduction in some services or their complete suspension. BA may also seek to contract out more of its short-haul network to franchise operators such as GB Airways, which are keen to expand their networks.

A BA spokesman described reports that its workforce would be cut from 57,000 to 47,000 as "pure speculation", adding: "This is still a project which is in its relative infancy. They team were given a blank sheet of paper and asked to come up with a range of options that will best see us through the current market conditions."

BA is losing around £2m a day following the steep fall in air travel since 11 September which has hit its lucrative transatlantic routes particularly hard. Traffic in November was down 18 per cent on the same month last year. Business-class and first-class passenger numbers were down by 25 per cent.

By February, BA should know whether it has got regulatory approval for its long-delayed transatlantic alliance with American Airlines. With Tony Blair personally lobbying the Bush administration to clear the deal, there are rising hopes that the BA-AA tie-up will be allowed to proceed, linked to an "open skies" agreement to open up transatlantic routes from Heathrow to more competition.

However, the acute financial difficulties facing Britain's other transatlantic operator out of Heathrow, Virgin Atlantic, have complicated the issue. The European Commission is also taking longer than expected to decide on what conditions it wants in return for approving BA-AA.