British Airways PLC, which is facing tough competition from budget airlines and coping with surging fuel costs, announced another cost-cutting program Friday.
BA said it plans to reduce costs by 450 million pounds ($780 million) over the next two years in a move that is likely to lead to further job losses.
The carrier also said that its fuel bill for 2006-2007 was forecast to rise 400 million pounds ($695 million) to 2 billion pounds ($3.5 billion), raising the possibility of further fuel surcharge increases on passengers' tickets.
The airline said revenue growth for 2006-2007 was forecast between 4 percent and 5 percent. Total costs for 2006-07, excluding fuel, were forecast to be flat with increases offset by cost efficiencies.
The savings target and the fuel forecast were contained in BA's 2006-2008 business plan revealed to analysts Friday.
The airline also said it plans to invest nearly 200 million pounds ($350 million) on its booking Web site and new on-board services, including a new Club World seat and on-demand films in all cabins.
"This plan will make us fit for the future," said Chief Executive Willie Walsh. "Better management of our costs and having an absolute focus on customer needs will give us a lasting platform for success."
BA said the plans could lead to job losses and that the fuel surcharge situation was "under constant review." That appeared to change the company's stance slightly from last month when Walsh said there were no plans to change the surcharge.
BA shares rose 1.9 percent to 322.75 pence ($5.61) on the London Stock Exchange.
The business plan covers the period up to March 2008 when the airline moves nearly all its operations into the new Terminal 5 at Heathrow airport. The terminal is still under construction.
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