The airline industry is in a volatile phase at the moment

Sir Michael Bishop BMI British Midland chairman

The airline said there had been a reduction in business class travel and lower levels of business throughout the network since 11 September.

It plans to cut seat capacity for the 2001-02 winter timetable by 20% starting on 28 October.

Chairman Sir Michael Bishop said: "Our intention is to operate lower capacity aircraft wherever possible and to maintain the present network.

Voluntary redundancy

"We will increase frequencies or capacity only when strategic opportunities occur."

He added: "The airline industry is in a volatile phase at the moment and it is impossible to predict if our prospects will deteriorate or be improved by the actions of other carriers."

The airline said it would consider applications for voluntary redundancy and added that it was doing all it could to reduce compulsory lay-offs.

Sir Michael Bishop: "Lower capacity aircraft"

Sir Michael added: "I am hopeful that because of the business decisions that we have been taking for some time to reduce our cost base, we will not need to consider further job losses.

"However, worldwide events continue to have a serious impact on the aviation industry in general, and we will continue to review our situation on a regular basis."

Representatives from the Transport and General Workers Union (TGWU) are meeting management to discuss the lay-offs.

'Disastrous news'

Tim Lyle, national secretary of the TGWU, said: "This is yet more disastrous news for aviation workers.

"With over 400 cabin crew members at British Midland, the T&G will be demanding involvement in the talks as to how these job cuts will be handled."

Rival carriers BA and Virgin Atlantic have already axed 7,000 and 1,200 jobs, respectively, and trimmed capacity.

Meanwhile US carriers have made even deeper cutbacks.

In Europe, Swissair declared bankruptcy, becoming the first major corporate victim of the 11 September hijackings, while Belgian carrier Sabena followed suit on Wednesday.